Correlation Between BankInvest Optima and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both BankInvest Optima 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 BankInvest Optima and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BankInvest Optima 10 and Alcoa Corp, you can compare the effects of market volatilities on BankInvest Optima 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 BankInvest Optima with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Optima and Alcoa Corp.
Diversification Opportunities for BankInvest Optima and Alcoa Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BankInvest and Alcoa is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Optima 10 and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and BankInvest Optima 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 BankInvest Optima 10 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 BankInvest Optima i.e., BankInvest Optima and Alcoa Corp go up and down completely randomly.
Pair Corralation between BankInvest Optima and Alcoa Corp
Assuming the 90 days trading horizon BankInvest Optima 10 is expected to under-perform the Alcoa Corp. But the stock apears to be less risky and, when comparing its historical volatility, BankInvest Optima 10 is 11.58 times less risky than Alcoa Corp. The stock trades about -0.21 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 3,186 in Alcoa Corp on January 25, 2024 and sell it today you would earn a total of 420.00 from holding Alcoa Corp or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
BankInvest Optima 10 vs. Alcoa Corp
Performance |
| Timeline |
| BankInvest Optima |
| Alcoa Corp |
BankInvest Optima and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BankInvest Optima and Alcoa Corp
The main advantage of trading using opposite BankInvest Optima and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankInvest Optima 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.| BankInvest Optima vs. Novo Nordisk AS | BankInvest Optima vs. Nordea Bank Abp | BankInvest Optima vs. DSV Panalpina AS | BankInvest Optima vs. AP Mller |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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