Correlation Between Green Dot and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Green Dot 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 Green Dot and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Dot and Alcoa Corp, you can compare the effects of market volatilities on Green Dot 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 Green Dot with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Dot and Alcoa Corp.
Diversification Opportunities for Green Dot and Alcoa Corp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Green and Alcoa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Green Dot and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Green Dot 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 Green Dot 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 Green Dot i.e., Green Dot and Alcoa Corp go up and down completely randomly.
Pair Corralation between Green Dot and Alcoa Corp
Given the investment horizon of 90 days Green Dot is expected to under-perform the Alcoa Corp. But the stock apears to be less risky and, when comparing its historical volatility, Green Dot is 1.21 times less risky than Alcoa Corp. The stock trades about -0.14 of its potential returns per unit of risk. The Alcoa Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,135 in Alcoa Corp on January 20, 2024 and sell it today you would earn a total of 412.00 from holding Alcoa Corp or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Green Dot vs. Alcoa Corp
Performance |
| Timeline |
| Green Dot |
| Alcoa Corp |
Green Dot and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Dot and Alcoa Corp
The main advantage of trading using opposite Green Dot and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Dot 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 Green Dot 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.| Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |