Correlation Between Alcoa Corp and Special Opportunities
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Special Opportunities 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 Special Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Special Opportunities Closed, you can compare the effects of market volatilities on Alcoa Corp and Special Opportunities 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 Special Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Special Opportunities.
Diversification Opportunities for Alcoa Corp and Special Opportunities
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and Special is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Special Opportunities Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Special Opportunities 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 Special Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Special Opportunities has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Special Opportunities go up and down completely randomly.
Pair Corralation between Alcoa Corp and Special Opportunities
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Special Opportunities. In addition to that, Alcoa Corp is 4.42 times more volatile than Special Opportunities Closed. It trades about -0.11 of its total potential returns per unit of risk. Special Opportunities Closed is currently generating about 0.21 per unit of volatility. If you would invest 1,450 in Special Opportunities Closed on December 2, 2024 and sell it today you would earn a total of 77.00 from holding Special Opportunities Closed or generate 5.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alcoa Corp vs. Special Opportunities Closed
Performance |
Timeline |
Alcoa Corp |
Special Opportunities |
Alcoa Corp and Special Opportunities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alcoa Corp and Special Opportunities
The main advantage of trading using opposite Alcoa Corp and Special Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Special Opportunities 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 Special Opportunities will offset losses from the drop in Special Opportunities' long position.Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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