Correlation Between Baxter International and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Baxter International and Alcoa Corp 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 Baxter International and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Alcoa Corp, you can compare the effects of market volatilities on Baxter International and Alcoa Corp 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 Baxter International with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Alcoa Corp.
Diversification Opportunities for Baxter International and Alcoa Corp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Baxter and Alcoa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Baxter International 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 Baxter International are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Baxter International i.e., Baxter International and Alcoa Corp go up and down completely randomly.
Pair Corralation between Baxter International and Alcoa Corp
If you would invest 3,388 in Alcoa Corp on December 29, 2023 and sell it today you would lose (9.00) from holding Alcoa Corp or give up 0.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 1.61% |
Values | Daily Returns |
Baxter International vs. Alcoa Corp
Performance |
Timeline |
Baxter International |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Alcoa Corp |
Baxter International and Alcoa Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baxter International and Alcoa Corp
The main advantage of trading using opposite Baxter International and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.Baxter International vs. Westrock Coffee | Baxter International vs. ASE Industrial Holding | Baxter International vs. El Pollo Loco | Baxter International vs. Entegris |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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