This module allows you to analyze existing cross correlation between Apple Inc and Alcoa Inc. You can compare the effects of market volatilities on Apple and Alcoa 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 Apple with a short position of Alcoa. See also your portfolio center. Please also check ongoing floating volatility patterns of Apple and Alcoa.
Given the investment horizon of 30 days, Apple Inc is expected to generate 0.64 times more return on investment than Alcoa. However, Apple Inc is 1.57 times less risky than Alcoa. It trades about 0.4 of its potential returns per unit of risk. Alcoa Inc is currently generating about -0.11 per unit of risk. If you would invest 12,185 in Apple Inc on January 25, 2017 and sell it today you would earn a total of 1,481 from holding Apple Inc or generate 12.15% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc. and Alcoa Inc. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Inc and Apple 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 Apple Inc are associated (or correlated) with Alcoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Inc has no effect on the direction of Apple i.e. Apple and Alcoa go up and down completely randomly.