Correlation Between WW Grainger and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both WW Grainger 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 WW Grainger and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WW Grainger and Alcoa Corp, you can compare the effects of market volatilities on WW Grainger 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 WW Grainger with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WW Grainger and Alcoa Corp.
Diversification Opportunities for WW Grainger and Alcoa Corp
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GWW and Alcoa is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding WW Grainger and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and WW Grainger 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 WW Grainger 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 WW Grainger i.e., WW Grainger and Alcoa Corp go up and down completely randomly.
Pair Corralation between WW Grainger and Alcoa Corp
Considering the 90-day investment horizon WW Grainger is expected to under-perform the Alcoa Corp. But the stock apears to be less risky and, when comparing its historical volatility, WW Grainger is 2.21 times less risky than Alcoa Corp. The stock trades about -0.16 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 3,103 in Alcoa Corp on January 18, 2024 and sell it today you would earn a total of 506.00 from holding Alcoa Corp or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WW Grainger vs. Alcoa Corp
Performance |
| Timeline |
| WW Grainger |
| Alcoa Corp |
WW Grainger and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WW Grainger and Alcoa Corp
The main advantage of trading using opposite WW Grainger and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WW Grainger 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.| WW Grainger vs. Quanex Building Products | WW Grainger vs. Gibraltar Industries | WW Grainger vs. Armstrong World Industries | WW Grainger vs. Janus International Group |
| Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Norsk Hydro ASA | Alcoa Corp vs. Aquagold International | Alcoa Corp vs. Thrivent High Yield |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |