Correlation Between OPC Energy and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both OPC Energy 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 OPC Energy and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPC Energy and Alcoa Corp, you can compare the effects of market volatilities on OPC Energy 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 OPC Energy with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPC Energy and Alcoa Corp.
Diversification Opportunities for OPC Energy and Alcoa Corp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OPC and Alcoa is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding OPC Energy and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and OPC Energy 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 OPC Energy 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 OPC Energy i.e., OPC Energy and Alcoa Corp go up and down completely randomly.
Pair Corralation between OPC Energy and Alcoa Corp
Assuming the 90 days trading horizon OPC Energy is expected to generate 17.24 times less return on investment than Alcoa Corp. In addition to that, OPC Energy is 1.1 times more volatile than Alcoa Corp. It trades about 0.01 of its total potential returns per unit of risk. Alcoa Corp is currently generating about 0.25 per unit of volatility. If you would invest 3,186 in Alcoa Corp on January 25, 2024 and sell it today you would earn a total of 422.00 from holding Alcoa Corp or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
OPC Energy vs. Alcoa Corp
Performance |
| Timeline |
| OPC Energy |
| Alcoa Corp |
OPC Energy and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPC Energy and Alcoa Corp
The main advantage of trading using opposite OPC Energy and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPC Energy 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.| OPC Energy vs. Energix Renewable Energies | OPC Energy vs. Doral Group Renewable | OPC Energy vs. Elbit Systems | OPC Energy vs. Electreon Wireless |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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