Correlation Between IMCO Industries and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both IMCO Industries 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 IMCO Industries and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMCO Industries and Alcoa Corp, you can compare the effects of market volatilities on IMCO Industries 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 IMCO Industries with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMCO Industries and Alcoa Corp.
Diversification Opportunities for IMCO Industries and Alcoa Corp
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between IMCO and Alcoa is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding IMCO Industries and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and IMCO Industries 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 IMCO Industries 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 IMCO Industries i.e., IMCO Industries and Alcoa Corp go up and down completely randomly.
Pair Corralation between IMCO Industries and Alcoa Corp
Assuming the 90 days trading horizon IMCO Industries is expected to generate 1.39 times more return on investment than Alcoa Corp. However, IMCO Industries is 1.39 times more volatile than Alcoa Corp. It trades about 0.08 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.03 per unit of risk. If you would invest 262,000 in IMCO Industries on February 6, 2024 and sell it today you would earn a total of 8,000 from holding IMCO Industries or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 66.67% |
| Values | Daily Returns |
IMCO Industries vs. Alcoa Corp
Performance |
| Timeline |
| IMCO Industries |
| Alcoa Corp |
IMCO Industries and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMCO Industries and Alcoa Corp
The main advantage of trading using opposite IMCO Industries and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMCO Industries 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.| IMCO Industries vs. Fox Wizel | IMCO Industries vs. FMS Enterprises Migun | IMCO Industries vs. Bet Shemesh Engines | IMCO Industries vs. Analyst IMS Investment |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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