diversifiable risk of combining Vericel Corp and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vericel Corp Ord and Alcoa Corp, you can compare the effects of market volatilities on Vericel Corp 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 Vericel Corp with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vericel Corp and Alcoa Corp.
Diversification Opportunities for Vericel Corp and Alcoa Corp
Pair Corralation between Vericel Corp and Alcoa Corp
Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 0.56 times more return on investment than Alcoa Corp. However, Vericel Corp Ord is 1.8 times less risky than Alcoa Corp. It trades about 0.18 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.17 per unit of risk. If you would invest 4,456 in Vericel Corp Ord on November 30, 2023 and sell it today you would earn a total of 344.00 from holding Vericel Corp Ord or generate 7.72% return on investment over 90 days.
|3 Months [change]
Vericel Corp Ord vs. Alcoa Corp
Vericel Corp and Alcoa Corp Volatility Contrast
Pair Trading with Vericel Corp and Alcoa CorpThe main advantage of trading using opposite Vericel Corp and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vericel Corp 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 Vericel Corp Ord 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.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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