Correlation Between Alcoa Corp and QNB Corp

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

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

Diversification Opportunities for Alcoa Corp and QNB Corp

-0.54

Correlation Coefficient

Alcoa Corp  QNB Corp

Excellent diversification

The 3 months correlation between Alcoa and QNB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp 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 QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and QNB Corp go up and down completely randomly.

Pair Corralation between Alcoa Corp and QNB Corp

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the QNB Corp. In addition to that, Alcoa Corp is 3.96 times more volatile than QNB Corp. It trades about -0.06 of its total potential returns per unit of risk. QNB Corp is currently generating about 0.12 per unit of volatility. If you would invest  3,359  in QNB Corp on December 26, 2024 and sell it today you would earn a total of  175.00  from holding QNB Corp or generate 5.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alcoa Corp  vs.  QNB Corp

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

QNB Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QNB Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, QNB Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alcoa Corp and QNB Corp

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

The idea behind Alcoa Corp and QNB Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.