Correlation Between Alcoa Corp and Hartford Multifactor
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Hartford Multifactor 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 Hartford Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Hartford Multifactor Equity, you can compare the effects of market volatilities on Alcoa Corp and Hartford Multifactor 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 Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Hartford Multifactor.
Diversification Opportunities for Alcoa Corp and Hartford Multifactor
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alcoa and Hartford is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Hartford Multifactor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor 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 Hartford Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Multifactor has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Hartford Multifactor go up and down completely randomly.
Pair Corralation between Alcoa Corp and Hartford Multifactor
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Hartford Multifactor. In addition to that, Alcoa Corp is 2.93 times more volatile than Hartford Multifactor Equity. It trades about -0.09 of its total potential returns per unit of risk. Hartford Multifactor Equity is currently generating about -0.14 per unit of volatility. If you would invest 5,266 in Hartford Multifactor Equity on December 27, 2024 and sell it today you would lose (176.50) from holding Hartford Multifactor Equity or give up 3.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alcoa Corp vs. Hartford Multifactor Equity
Performance |
Timeline |
Alcoa Corp |
Hartford Multifactor |
Alcoa Corp and Hartford Multifactor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alcoa Corp and Hartford Multifactor
The main advantage of trading using opposite Alcoa Corp and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Hartford Multifactor 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 Hartford Multifactor will offset losses from the drop in Hartford Multifactor's long position.Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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