Correlation Between Alcoa Corp and ProShares Large

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and ProShares Large 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 Alcoa Corp and ProShares Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and ProShares Large Cap, you can compare the effects of market volatilities on Alcoa Corp and ProShares Large 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 Alcoa Corp with a short position of ProShares Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and ProShares Large.

Diversification Opportunities for Alcoa Corp and ProShares Large

0.92

Correlation Coefficient

Alcoa Corp  ProShares Large

Almost no diversification

The 3 months correlation between Alcoa and ProShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and ProShares Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Large Cap and Alcoa Corp 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 Alcoa Corp are associated (or correlated) with ProShares Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Large Cap has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and ProShares Large go up and down completely randomly.

Pair Corralation between Alcoa Corp and ProShares Large

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 3.31 times more return on investment than ProShares Large. However, Alcoa Corp is 3.31 times more volatile than ProShares Large Cap. It trades about 0.14 of its potential returns per unit of risk. ProShares Large Cap is currently generating about 0.25 per unit of risk. If you would invest  2,446  in Alcoa Corp on May 1, 2025 and sell it today you would earn a total of  566.00  from holding Alcoa Corp or generate 23.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Alcoa Corp  vs.  ProShares Large Cap

Alcoa Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

ProShares Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Large Cap are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, ProShares Large displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcoa Corp and ProShares Large

The main advantage of trading using opposite Alcoa Corp and ProShares Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, ProShares Large 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 ProShares Large will offset losses from the drop in ProShares Large's long position.

The idea behind Alcoa Corp and ProShares Large Cap 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.