Correlation Between Alcoa Corp and Yamana Gold

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Yamana Gold 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 Yamana Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and Yamana Gold, you can compare the effects of market volatilities on Alcoa Corp and Yamana Gold 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 Yamana Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Yamana Gold.

Diversification Opportunities for Alcoa Corp and Yamana Gold

-0.23

Correlation Coefficient

Alcoa Corp  Yamana Gold

Very good diversification

The 3 months correlation between Alcoa and Yamana is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Yamana Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamana Gold 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 Yamana Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamana Gold has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Yamana Gold go up and down completely randomly.

Pair Corralation between Alcoa Corp and Yamana Gold

If you would invest  2,995  in Alcoa Corp on March 14, 2024 and sell it today you would earn a total of  1,026  from holding Alcoa Corp or generate 34.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Alcoa Corp  vs.  Yamana Gold

Alcoa Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Yamana Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yamana Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Yamana Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alcoa Corp and Yamana Gold

The main advantage of trading using opposite Alcoa Corp and Yamana Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Yamana Gold 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 Yamana Gold will offset losses from the drop in Yamana Gold's long position.

The idea behind Alcoa Corp and Yamana Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.