Correlation Between Sparinvest INDEX and Alcoa Corp
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By analyzing existing cross correlation between Sparinvest INDEX Lav and Alcoa Corp, you can compare the effects of market volatilities on Sparinvest INDEX 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 Sparinvest INDEX with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparinvest INDEX and Alcoa Corp.
Diversification Opportunities for Sparinvest INDEX and Alcoa Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparinvest and Alcoa is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest INDEX Lav and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Sparinvest INDEX 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 Sparinvest INDEX Lav 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 Sparinvest INDEX i.e., Sparinvest INDEX and Alcoa Corp go up and down completely randomly.
Pair Corralation between Sparinvest INDEX and Alcoa Corp
Assuming the 90 days trading horizon Sparinvest INDEX Lav is expected to under-perform the Alcoa Corp. But the fund apears to be less risky and, when comparing its historical volatility, Sparinvest INDEX Lav is 8.5 times less risky than Alcoa Corp. The fund trades about -0.13 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 418.00 from holding Alcoa Corp or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Sparinvest INDEX Lav vs. Alcoa Corp
Performance |
| Timeline |
| Sparinvest INDEX Lav |
| Alcoa Corp |
Sparinvest INDEX and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparinvest INDEX and Alcoa Corp
The main advantage of trading using opposite Sparinvest INDEX and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparinvest INDEX 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.| Sparinvest INDEX vs. Jyske Invest Nye | Sparinvest INDEX vs. Jyske Invest Nye | Sparinvest INDEX vs. Jyske Invest Hjt | Sparinvest INDEX vs. Jyske Invest Lange |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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