Correlation Between Alcoa Corp and FundX Investment

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

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

Diversification Opportunities for Alcoa Corp and FundX Investment

-0.16

Correlation Coefficient

Alcoa Corp  FundX Investment

Good diversification

The 3 months correlation between Alcoa and FundX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and FundX Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Investment Trust 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 FundX Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Investment Trust has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and FundX Investment go up and down completely randomly.

Pair Corralation between Alcoa Corp and FundX Investment

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 3.44 times more return on investment than FundX Investment. However, Alcoa Corp is 3.44 times more volatile than FundX Investment Trust. It trades about -0.03 of its potential returns per unit of risk. FundX Investment Trust is currently generating about -0.16 per unit of risk. If you would invest  3,411  in Alcoa Corp on December 3, 2024 and sell it today you would lose (86.00) from holding Alcoa Corp or give up 2.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Alcoa Corp  vs.  FundX Investment Trust

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 weak 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.

FundX Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days FundX Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, FundX Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alcoa Corp and FundX Investment

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

The idea behind Alcoa Corp and FundX Investment Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.