Correlation Between Alcoa Corp and Harbor Energy

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

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

Diversification Opportunities for Alcoa Corp and Harbor Energy

-0.34

Correlation Coefficient

Alcoa Corp  Harbor Energy

Very good diversification

The 3 months correlation between Alcoa and Harbor is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Harbor Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Energy Transition 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 Harbor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Energy Transition has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Harbor Energy go up and down completely randomly.

Pair Corralation between Alcoa Corp and Harbor Energy

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Harbor Energy. In addition to that, Alcoa Corp is 1.22 times more volatile than Harbor Energy Transition. It trades about -0.22 of its total potential returns per unit of risk. Harbor Energy Transition is currently generating about 0.39 per unit of volatility. If you would invest  1,257  in Harbor Energy Transition on October 12, 2024 and sell it today you would earn a total of  66.00  from holding Harbor Energy Transition or generate 5.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.0%
Values	Daily Returns

Alcoa Corp  vs.  Harbor Energy Transition

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 unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Harbor Energy Transition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Harbor Energy Transition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent basic indicators, Harbor Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alcoa Corp and Harbor Energy

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

The idea behind Alcoa Corp and Harbor Energy Transition 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.