Correlation Between Intercontinental and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Intercontinental 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 Intercontinental and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercontinental Exchange and Alcoa Corp, you can compare the effects of market volatilities on Intercontinental 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 Intercontinental with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercontinental and Alcoa Corp.
Diversification Opportunities for Intercontinental and Alcoa Corp
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Intercontinental and Alcoa is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Intercontinental Exchange and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Intercontinental 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 Intercontinental Exchange 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 Intercontinental i.e., Intercontinental and Alcoa Corp go up and down completely randomly.
Pair Corralation between Intercontinental and Alcoa Corp
Considering the 90-day investment horizon Intercontinental Exchange is expected to generate 0.39 times more return on investment than Alcoa Corp. However, Intercontinental Exchange is 2.54 times less risky than Alcoa Corp. It trades about 0.03 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.02 per unit of risk. If you would invest 11,013 in Intercontinental Exchange on January 20, 2024 and sell it today you would earn a total of 2,108 from holding Intercontinental Exchange or generate 19.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Intercontinental Exchange vs. Alcoa Corp
Performance |
Timeline |
Intercontinental Exchange |
Alcoa Corp |
Intercontinental and Alcoa Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Intercontinental and Alcoa Corp
The main advantage of trading using opposite Intercontinental and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercontinental 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.Intercontinental vs. Nasdaq Inc | Intercontinental vs. SP Global | Intercontinental vs. Moodys | Intercontinental vs. FactSet Research Systems |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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