This module allows you to analyze existing cross correlation between Apple and Alcoa Corporation. You can compare the effects of market volatilities on Apple and Alcoa 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. See also your portfolio center. Please also check ongoing floating volatility patterns of Apple and Alcoa.
Given the investment horizon of 30 days, Apple is expected to generate 0.85 times more return on investment than Alcoa. However, Apple is 1.18 times less risky than Alcoa. It trades about 0.47 of its potential returns per unit of risk. Alcoa Corporation is currently generating about -0.11 per unit of risk. If you would invest 16,294 in Apple on April 24, 2018 and sell it today you would earn a total of 2,542 from holding Apple or generate 15.6% return on investment over 30 days.
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 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 are associated (or correlated) with Alcoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa has no effect on the direction of Apple i.e. Apple and Alcoa go up and down completely randomly.
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