Correlation Between Alcoa Corp and US Treasury
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and US Treasury 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 US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and US Treasury 12, you can compare the effects of market volatilities on Alcoa Corp and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and US Treasury.
Diversification Opportunities for Alcoa Corp and US Treasury
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alcoa and OBIL is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and US Treasury 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 12 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 12 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and US Treasury go up and down completely randomly.
Pair Corralation between Alcoa Corp and US Treasury
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the US Treasury. In addition to that, Alcoa Corp is 106.9 times more volatile than US Treasury 12. It trades about -0.04 of its total potential returns per unit of risk. US Treasury 12 is currently generating about 0.42 per unit of volatility. If you would invest 4,966 in US Treasury 12 on March 26, 2025 and sell it today you would earn a total of 49.00 from holding US Treasury 12 or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. US Treasury 12
Performance |
| Timeline |
| Alcoa Corp |
| US Treasury 12 |
Alcoa Corp and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and US Treasury
The main advantage of trading using opposite Alcoa Corp and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury's long position.| Alcoa Corp vs. Royal Gold | Alcoa Corp vs. Agnico Eagle Mines | Alcoa Corp vs. Sandstorm Gold Ltd | Alcoa Corp vs. Osisko Gold Ro |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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