Correlation Between Alcoa Corp and MicroSectors FANG
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and MicroSectors FANG 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 MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and MicroSectors FANG Index, you can compare the effects of market volatilities on Alcoa Corp and MicroSectors FANG 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 MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and MicroSectors FANG.
Diversification Opportunities for Alcoa Corp and MicroSectors FANG
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alcoa and MicroSectors is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and MicroSectors FANG Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG Index 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 MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG Index has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and MicroSectors FANG go up and down completely randomly.
Pair Corralation between Alcoa Corp and MicroSectors FANG
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.89 times more return on investment than MicroSectors FANG. However, Alcoa Corp is 1.13 times less risky than MicroSectors FANG. It trades about 0.14 of its potential returns per unit of risk. MicroSectors FANG Index is currently generating about -0.29 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 Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Alcoa Corp vs. MicroSectors FANG Index
Performance |
Timeline |
Alcoa Corp |
MicroSectors FANG Index |
Alcoa Corp and MicroSectors FANG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alcoa Corp and MicroSectors FANG
The main advantage of trading using opposite Alcoa Corp and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, MicroSectors FANG 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 MicroSectors FANG will offset losses from the drop in MicroSectors FANG's long position.Alcoa Corp vs. First Majestic Silver | Alcoa Corp vs. Celanese | Alcoa Corp vs. Dakota Gold Corp | Alcoa Corp vs. Ivanhoe Electric |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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