Correlation Between Alcoa Corp and APPLE

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

By analyzing existing cross correlation between Alcoa Corp and APPLE INC 445, you can compare the effects of market volatilities on Alcoa Corp and APPLE 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 APPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and APPLE.

Diversification Opportunities for Alcoa Corp and APPLE

-0.36

Correlation Coefficient

Alcoa Corp  APPLE

Very good diversification

The 3 months correlation between Alcoa and APPLE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and APPLE INC 445 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE INC 445 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 APPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE INC 445 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and APPLE go up and down completely randomly.

Pair Corralation between Alcoa Corp and APPLE

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the APPLE. In addition to that, Alcoa Corp is 2.21 times more volatile than APPLE INC 445. It trades about -0.09 of its total potential returns per unit of risk. APPLE INC 445 is currently generating about 0.11 per unit of volatility. If you would invest  9,177  in APPLE INC 445 on December 30, 2024 and sell it today you would earn a total of  829.00  from holding APPLE INC 445 or generate 9.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Alcoa Corp  vs.  APPLE INC 445

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

APPLE INC 445

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APPLE INC 445 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, APPLE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alcoa Corp and APPLE

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

The idea behind Alcoa Corp and APPLE INC 445 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.