Correlation Analysis Between Alcoa and Best Buy

Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp. and Best Buy Co Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Alcoa 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 Alcoa Corporation are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Alcoa i.e. Alcoa and Best Buy go up and down completely randomly.