This module allows you to analyze existing cross correlation between Alcoa Inc and Sprint Corporation. You can compare the effects of market volatilities on Alcoa and Sprint 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 with a short position of Sprint. See also your portfolio center. Please also check ongoing floating volatility patterns of Alcoa and Sprint.
Allowing for the 30-days total investment horizon, Alcoa Inc is expected to under-perform the Sprint. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Inc is 1.07 times less risky than Sprint. The stock trades about -0.11 of its potential returns per unit of risk. The Sprint Corporation is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 919.00 in Sprint Corporation on January 25, 2017 and sell it today you would lose (25.00) from holding Sprint Corporation or give up 2.72% of portfolio value over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Inc. and Sprint Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Sprint and Alcoa 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 Inc are associated (or correlated) with Sprint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprint has no effect on the direction of Alcoa i.e. Alcoa and Sprint go up and down completely randomly.