Correlation Between SPDR DoubleLine and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both SPDR DoubleLine 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 SPDR DoubleLine and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR DoubleLine Short and Alcoa Corp, you can compare the effects of market volatilities on SPDR DoubleLine 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 SPDR DoubleLine with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR DoubleLine and Alcoa Corp.
Diversification Opportunities for SPDR DoubleLine and Alcoa Corp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Alcoa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SPDR DoubleLine Short and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and SPDR DoubleLine 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 SPDR DoubleLine Short 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 SPDR DoubleLine i.e., SPDR DoubleLine and Alcoa Corp go up and down completely randomly.
Pair Corralation between SPDR DoubleLine and Alcoa Corp
Given the investment horizon of 90 days SPDR DoubleLine is expected to generate 27.61 times less return on investment than Alcoa Corp. But when comparing it to its historical volatility, SPDR DoubleLine Short is 33.91 times less risky than Alcoa Corp. It trades about 0.13 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,050 in Alcoa Corp on January 26, 2024 and sell it today you would earn a total of 558.00 from holding Alcoa Corp or generate 18.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR DoubleLine Short vs. Alcoa Corp
Performance |
| Timeline |
| SPDR DoubleLine Short |
| Alcoa Corp |
SPDR DoubleLine and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR DoubleLine and Alcoa Corp
The main advantage of trading using opposite SPDR DoubleLine and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR DoubleLine 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.| SPDR DoubleLine vs. SPDR DoubleLine Emerging | SPDR DoubleLine vs. SPDR SSgA Ultra | SPDR DoubleLine vs. SPDR Bloomberg 1 10 | SPDR DoubleLine vs. SPDR DoubleLine Total |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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