Correlation Between Alcoa Corp and NRBO Old

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and NRBO Old 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 NRBO Old into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and NRBO Old, you can compare the effects of market volatilities on Alcoa Corp and NRBO Old 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 NRBO Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and NRBO Old.

Diversification Opportunities for Alcoa Corp and NRBO Old

0.5

Correlation Coefficient

Alcoa Corp  NRBO Old

Very weak diversification

The 3 months correlation between Alcoa and NRBO is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and NRBO Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRBO Old 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 NRBO Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRBO Old has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and NRBO Old go up and down completely randomly.

Pair Corralation between Alcoa Corp and NRBO Old

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the NRBO Old. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 2.04 times less risky than NRBO Old. The stock trades about -0.08 of its potential returns per unit of risk. The NRBO Old is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  176.00  in NRBO Old on December 27, 2024 and sell it today you would earn a total of  13.00  from holding NRBO Old or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.07%
Values	Daily Returns

Alcoa Corp  vs.  NRBO Old

Alcoa Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NRBO Old

Risk-Adjusted Performance

Modest

Over the last 90 days NRBO Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak fundamental drivers, NRBO Old displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcoa Corp and NRBO Old

The main advantage of trading using opposite Alcoa Corp and NRBO Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, NRBO Old 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 NRBO Old will offset losses from the drop in NRBO Old's long position.

The idea behind Alcoa Corp and NRBO Old 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.