Correlation Between Apple and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Alcoa Corp, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Alcoa Corp.
Diversification Opportunities for Apple and Alcoa Corp
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and Alcoa is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Apple 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 Apple Inc 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 Apple i.e., Apple and Alcoa Corp go up and down completely randomly.
Pair Corralation between Apple and Alcoa Corp
Given the investment horizon of 90 days Apple Inc is expected to generate 0.47 times more return on investment than Alcoa Corp. However, Apple Inc is 2.13 times less risky than Alcoa Corp. It trades about 0.02 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.01 per unit of risk. If you would invest 14,737 in Apple Inc on January 20, 2024 and sell it today you would earn a total of 1,967 from holding Apple Inc or generate 13.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc vs. Alcoa Corp
Performance |
Timeline |
Apple Inc |
Alcoa Corp |
Apple and Alcoa Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Alcoa Corp
The main advantage of trading using opposite Apple and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.The idea behind Apple Inc and Alcoa Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Alcoa Corp vs. Franco Nevada | Alcoa Corp vs. Osisko Gold Ro | Alcoa Corp vs. Royal Gold | Alcoa Corp vs. Fortuna Silver Mines |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
CEOs Directory Screen CEOs from public companies around the world | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |