Correlation Between Alcoa Corp and Apple
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Apple Inc, you can compare the effects of market volatilities on Alcoa Corp and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Apple.
Diversification Opportunities for Alcoa Corp and Apple
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alcoa and Apple is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Apple go up and down completely randomly.
Pair Corralation between Alcoa Corp and Apple
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.58 times more return on investment than Apple. However, Alcoa Corp is 1.58 times more volatile than Apple Inc. It trades about 0.01 of its potential returns per unit of risk. Apple Inc is currently generating about -0.13 per unit of risk. If you would invest 2,802 in Alcoa Corp on March 11, 2025 and sell it today you would lose (1.00) from holding Alcoa Corp or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. Apple Inc
Performance |
| Timeline |
| Alcoa Corp |
| Apple Inc |
Alcoa Corp and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Apple
The main advantage of trading using opposite Alcoa Corp and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Alcoa Corp vs. United States Steel | Alcoa Corp vs. Reliance Steel Aluminum | Alcoa Corp vs. ArcelorMittal SA ADR | Alcoa Corp vs. Commercial Metals |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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