Correlation Between Alcoa Corp and Pimco Flexible

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Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Pimco Flexible 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 Pimco Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Pimco Flexible Municipal, you can compare the effects of market volatilities on Alcoa Corp and Pimco Flexible 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 Pimco Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Pimco Flexible.

Diversification Opportunities for Alcoa Corp and Pimco Flexible

AlcoaPimcoDiversified AwayAlcoaPimcoDiversified Away100%
-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Alcoa and Pimco is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Pimco Flexible Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Flexible Municipal 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 Pimco Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Flexible Municipal has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Pimco Flexible go up and down completely randomly.

Pair Corralation between Alcoa Corp and Pimco Flexible

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Pimco Flexible. In addition to that, Alcoa Corp is 7.2 times more volatile than Pimco Flexible Municipal. It trades about -0.04 of its total potential returns per unit of risk. Pimco Flexible Municipal is currently generating about -0.12 per unit of volatility. If you would invest  1,043  in Pimco Flexible Municipal on September 25, 2024 and sell it today you would lose (20.00) from holding Pimco Flexible Municipal or give up 1.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.62%
ValuesDaily Returns

Alcoa Corp  vs.  Pimco Flexible Municipal

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 010203040
JavaScript chart by amCharts 3.21.15AA PMAAX
       Timeline  
Alcoa Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alcoa Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec36384042444648
Pimco Flexible Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pimco Flexible Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10.210.2510.310.3510.410.4510.510.5510.610.65

Alcoa Corp and Pimco Flexible Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.32-6.98-4.64-2.30.02.44.847.289.71 0.51.01.52.02.53.0
JavaScript chart by amCharts 3.21.15AA PMAAX
       Returns  

Pair Trading with Alcoa Corp and Pimco Flexible

The main advantage of trading using opposite Alcoa Corp and Pimco Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Pimco Flexible 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 Pimco Flexible will offset losses from the drop in Pimco Flexible's long position.
The idea behind Alcoa Corp and Pimco Flexible Municipal 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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