Correlation Between IShares Public and Alcoa Corp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both IShares Public 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 Public 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 Public Limited and Alcoa Corp, you can compare the effects of market volatilities on IShares Public 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 Public with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Public and Alcoa Corp.

Diversification Opportunities for IShares Public and Alcoa Corp

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between IShares and Alcoa is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding IShares Public Limited and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and IShares Public 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 Public Limited 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 Public i.e., IShares Public and Alcoa Corp go up and down completely randomly.

Pair Corralation between IShares Public and Alcoa Corp

Assuming the 90 days horizon IShares Public is expected to generate 4.75 times less return on investment than Alcoa Corp. But when comparing it to its historical volatility, IShares Public Limited is 3.35 times less risky than Alcoa Corp. It trades about 0.27 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  2,660  in Alcoa Corp on December 29, 2023 and sell it today you would earn a total of  661.00  from holding Alcoa Corp or generate 24.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

IShares Public Limited  vs.  Alcoa Corp

 Performance 
       Timeline  
IShares Public 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Public Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, IShares Public may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Alcoa Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alcoa Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IShares Public and Alcoa Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Public and Alcoa Corp

The main advantage of trading using opposite IShares Public and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Public 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 IShares Public Limited 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.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk