Correlation Between Kinross Gold and Alcoa Corp

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Can any of the company-specific risk be diversified away by investing in both Kinross Gold and Alcoa Corp 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 Kinross Gold and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinross Gold and Alcoa Corp, you can compare the effects of market volatilities on Kinross Gold and Alcoa Corp 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 Kinross Gold with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinross Gold and Alcoa Corp.

Diversification Opportunities for Kinross Gold and Alcoa Corp

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between Kinross and Alcoa is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Kinross Gold 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 Kinross Gold are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Kinross Gold i.e., Kinross Gold and Alcoa Corp go up and down completely randomly.

Pair Corralation between Kinross Gold and Alcoa Corp

Considering the 90-day investment horizon Kinross Gold is expected to generate 1.09 times more return on investment than Alcoa Corp. However, Kinross Gold is 1.09 times more volatile than Alcoa Corp. It trades about -0.01 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.48 per unit of risk. If you would invest  990.00  in Kinross Gold on October 6, 2024 and sell it today you would lose (12.00) from holding Kinross Gold or give up 1.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Kinross Gold  vs.  Alcoa Corp

 Performance 
       Timeline  
Kinross Gold 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kinross Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Alcoa Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Kinross Gold and Alcoa Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kinross Gold and Alcoa Corp

The main advantage of trading using opposite Kinross Gold and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinross Gold position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.
The idea behind Kinross Gold and Alcoa Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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