Correlation Between Migdal Mutual and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Migdal Mutual 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 Migdal Mutual and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Migdal Mutual Funds and Alcoa Corp, you can compare the effects of market volatilities on Migdal Mutual 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 Migdal Mutual with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Migdal Mutual and Alcoa Corp.
Diversification Opportunities for Migdal Mutual and Alcoa Corp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Migdal and Alcoa is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Migdal Mutual Funds and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Migdal Mutual 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 Migdal Mutual Funds 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 Migdal Mutual i.e., Migdal Mutual and Alcoa Corp go up and down completely randomly.
Pair Corralation between Migdal Mutual and Alcoa Corp
Assuming the 90 days trading horizon Migdal Mutual Funds is expected to under-perform the Alcoa Corp. But the etf apears to be less risky and, when comparing its historical volatility, Migdal Mutual Funds is 8.55 times less risky than Alcoa Corp. The etf trades about -0.19 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 3,135 in Alcoa Corp on January 20, 2024 and sell it today you would earn a total of 412.00 from holding Alcoa Corp or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Migdal Mutual Funds vs. Alcoa Corp
Performance |
| Timeline |
| Migdal Mutual Funds |
| Alcoa Corp |
Migdal Mutual and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Migdal Mutual and Alcoa Corp
The main advantage of trading using opposite Migdal Mutual and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migdal Mutual 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.| Migdal Mutual vs. Migdal Mutual Funds | Migdal Mutual vs. Migdal Mutual Funds | Migdal Mutual vs. Migdal Mutual Funds | Migdal Mutual vs. Migdal Mutual Funds |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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