Correlation Between Alcoa Corp and Pyxus International

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

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

Diversification Opportunities for Alcoa Corp and Pyxus International

-0.02

Correlation Coefficient

Alcoa Corp  Pyxus International

Good diversification

The 3 months correlation between Alcoa and Pyxus is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Pyxus International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxus International 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 Pyxus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxus International has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Pyxus International go up and down completely randomly.

Pair Corralation between Alcoa Corp and Pyxus International

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Pyxus International. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 4.52 times less risky than Pyxus International. The stock trades about -0.01 of its potential returns per unit of risk. The Pyxus International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Pyxus International on October 4, 2024 and sell it today you would earn a total of  225.00  from holding Pyxus International or generate 450.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Alcoa Corp  vs.  Pyxus International

Alcoa Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alcoa Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pyxus International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pyxus International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pyxus International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcoa Corp and Pyxus International

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

The idea behind Alcoa Corp and Pyxus International 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.

Check out your portfolio center.

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.