Correlation Between Alcoa Corp and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and WisdomTree SmallCap 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 WisdomTree SmallCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and WisdomTree SmallCap Quality, you can compare the effects of market volatilities on Alcoa Corp and WisdomTree SmallCap 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 WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and WisdomTree SmallCap.
Diversification Opportunities for Alcoa Corp and WisdomTree SmallCap
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and WisdomTree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and WisdomTree SmallCap Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap 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 WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between Alcoa Corp and WisdomTree SmallCap
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 2.11 times more return on investment than WisdomTree SmallCap. However, Alcoa Corp is 2.11 times more volatile than WisdomTree SmallCap Quality. It trades about 0.08 of its potential returns per unit of risk. WisdomTree SmallCap Quality is currently generating about 0.14 per unit of risk. If you would invest 2,815 in Alcoa Corp on May 26, 2025 and sell it today you would earn a total of 353.00 from holding Alcoa Corp or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. WisdomTree SmallCap Quality
Performance |
| Timeline |
| Alcoa Corp |
| WisdomTree SmallCap |
Alcoa Corp and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and WisdomTree SmallCap
The main advantage of trading using opposite Alcoa Corp and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, WisdomTree SmallCap 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 WisdomTree SmallCap will offset losses from the drop in WisdomTree SmallCap's long position.| Alcoa Corp vs. Dupont De Nemours | Alcoa Corp vs. First Guaranty Bancshares | Alcoa Corp vs. Canada Goose Holdings | Alcoa Corp vs. Mfs International Diversification |
| WisdomTree SmallCap vs. WisdomTree Emerging Markets | WisdomTree SmallCap vs. WisdomTree Interest Rate | WisdomTree SmallCap vs. WisdomTree Interest Rate | WisdomTree SmallCap vs. WisdomTree Quality Dividend |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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