Correlation Between Alcoa Corp and CONAGRA

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

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

Diversification Opportunities for Alcoa Corp and CONAGRA

0.13

Correlation Coefficient

Alcoa Corp  CONAGRA

Average diversification

The 3 months correlation between Alcoa and CONAGRA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and CONAGRA BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA BRANDS INC 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 CONAGRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA BRANDS INC has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and CONAGRA go up and down completely randomly.

Pair Corralation between Alcoa Corp and CONAGRA

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the CONAGRA. In addition to that, Alcoa Corp is 2.7 times more volatile than CONAGRA BRANDS INC. It trades about -0.09 of its total potential returns per unit of risk. CONAGRA BRANDS INC is currently generating about -0.01 per unit of volatility. If you would invest  9,425  in CONAGRA BRANDS INC on December 30, 2024 and sell it today you would lose (101.00) from holding CONAGRA BRANDS INC or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alcoa Corp  vs.  CONAGRA BRANDS INC

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.

CONAGRA BRANDS INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONAGRA BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONAGRA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alcoa Corp and CONAGRA

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

The idea behind Alcoa Corp and CONAGRA BRANDS INC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.