Correlation Between Alcoa Corp and Navios Maritime

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Navios Maritime at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alcoa Corp and Navios Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and Navios Maritime Holdings, you can compare the effects of market volatilities on Alcoa Corp and Navios Maritime and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alcoa Corp with a short position of Navios Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Navios Maritime.

Diversification Opportunities for Alcoa Corp and Navios Maritime

-0.7

Correlation Coefficient

Alcoa Corp  Navios Maritime

Excellent diversification

The 3 months correlation between Alcoa and Navios is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Navios Maritime Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navios Maritime Holdings and Alcoa Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alcoa Corp are associated (or correlated) with Navios Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navios Maritime Holdings has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Navios Maritime go up and down completely randomly.

Pair Corralation between Alcoa Corp and Navios Maritime

If you would invest  3,015  in Alcoa Corp on August 31, 2024 and sell it today you would earn a total of  1,573  from holding Alcoa Corp or generate 52.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Alcoa Corp  vs.  Navios Maritime Holdings

Alcoa Corp

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Navios Maritime Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navios Maritime Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Navios Maritime is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alcoa Corp and Navios Maritime

The main advantage of trading using opposite Alcoa Corp and Navios Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Navios Maritime can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Navios Maritime will offset losses from the drop in Navios Maritime's long position.

The idea behind Alcoa Corp and Navios Maritime Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.