Correlation Between Alcoa Corp and NSANY

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

By analyzing existing cross correlation between Alcoa Corp and NSANY 481 17 SEP 30, you can compare the effects of market volatilities on Alcoa Corp and NSANY 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 NSANY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and NSANY.

Diversification Opportunities for Alcoa Corp and NSANY

0.07

Correlation Coefficient

Alcoa Corp  NSANY

Significant diversification

The 3 months correlation between Alcoa and NSANY is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and NSANY 481 17 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSANY 481 17 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 NSANY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSANY 481 17 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and NSANY go up and down completely randomly.

Pair Corralation between Alcoa Corp and NSANY

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 3.91 times more return on investment than NSANY. However, Alcoa Corp is 3.91 times more volatile than NSANY 481 17 SEP 30. It trades about 0.05 of its potential returns per unit of risk. NSANY 481 17 SEP 30 is currently generating about -0.03 per unit of risk. If you would invest  2,757  in Alcoa Corp on October 7, 2024 and sell it today you would earn a total of  814.00  from holding Alcoa Corp or generate 29.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.55%
Values	Daily Returns

Alcoa Corp  vs.  NSANY 481 17 SEP 30

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

NSANY 481 17

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSANY 481 17 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NSANY 481 17 SEP 30 investors.

Pair Trading with Alcoa Corp and NSANY

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

The idea behind Alcoa Corp and NSANY 481 17 SEP 30 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.