Correlation Between IShares Expanded and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both IShares Expanded 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 IShares Expanded and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Expanded Tech Software and Alcoa Corp, you can compare the effects of market volatilities on IShares Expanded 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 IShares Expanded with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and Alcoa Corp.
Diversification Opportunities for IShares Expanded and Alcoa Corp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and Alcoa is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech Software and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and IShares Expanded 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 iShares Expanded Tech Software 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 IShares Expanded i.e., IShares Expanded and Alcoa Corp go up and down completely randomly.
Pair Corralation between IShares Expanded and Alcoa Corp
Considering the 90-day investment horizon iShares Expanded Tech Software is expected to under-perform the Alcoa Corp. But the etf apears to be less risky and, when comparing its historical volatility, iShares Expanded Tech Software is 2.31 times less risky than Alcoa Corp. The etf trades about -0.25 of its potential returns per unit of risk. The Alcoa Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,158 in Alcoa Corp on January 26, 2024 and sell it today you would earn a total of 450.00 from holding Alcoa Corp or generate 14.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
iShares Expanded Tech Software vs. Alcoa Corp
Performance |
Timeline |
iShares Expanded Tech |
Alcoa Corp |
IShares Expanded and Alcoa Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Expanded and Alcoa Corp
The main advantage of trading using opposite IShares Expanded and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Expanded 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.IShares Expanded vs. OShares Quality Dividend | IShares Expanded vs. Aquagold International | IShares Expanded vs. Morningstar Unconstrained Allocation | IShares Expanded vs. High Yield Municipal Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |