This module allows you to analyze existing cross correlation between ATT and Alcoa Corporation. You can compare the effects of market volatilities on ATT and Alcoa 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 ATT with a short position of Alcoa. See also your portfolio center. Please also check ongoing floating volatility patterns of ATT and Alcoa.
Taking into account the 30 trading days horizon, ATT is expected to under-perform the Alcoa. But the stock apears to be less risky and, when comparing its historical volatility, ATT is 1.65 times less risky than Alcoa. The stock trades about -0.07 of its potential returns per unit of risk. The Alcoa Corporation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,578 in Alcoa Corporation on June 16, 2018 and sell it today you would earn a total of 148.00 from holding Alcoa Corporation or generate 3.23% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding ATT and Alcoa Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alcoa and ATT 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 ATT are associated (or correlated) with Alcoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa has no effect on the direction of ATT i.e. ATT and Alcoa go up and down completely randomly.
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