Correlation Between Lollands Bank and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Lollands Bank 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 Lollands Bank and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lollands Bank and Alcoa Corp, you can compare the effects of market volatilities on Lollands Bank 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 Lollands Bank with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lollands Bank and Alcoa Corp.
Diversification Opportunities for Lollands Bank and Alcoa Corp
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lollands and Alcoa is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Lollands Bank 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 Lollands Bank 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 Lollands Bank i.e., Lollands Bank and Alcoa Corp go up and down completely randomly.
Pair Corralation between Lollands Bank and Alcoa Corp
Assuming the 90 days trading horizon Lollands Bank is expected to generate 0.47 times more return on investment than Alcoa Corp. However, Lollands Bank is 2.15 times less risky than Alcoa Corp. It trades about 0.0 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.03 per unit of risk. If you would invest 59,879 in Lollands Bank on December 30, 2023 and sell it today you would lose (1,879) from holding Lollands Bank or give up 3.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Lollands Bank vs. Alcoa Corp
Performance |
Timeline |
Lollands Bank |
Alcoa Corp |
Lollands Bank and Alcoa Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lollands Bank and Alcoa Corp
The main advantage of trading using opposite Lollands Bank and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank 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.Lollands Bank vs. Novo Nordisk AS | Lollands Bank vs. AP Mller | Lollands Bank vs. AP Mller | Lollands Bank vs. DSV Panalpina AS |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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