Correlation Between Alcoa Corp and Centerra Gold
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Centerra 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 Centerra 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 Centerra Gold, you can compare the effects of market volatilities on Alcoa Corp and Centerra 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 Centerra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Centerra Gold.
Diversification Opportunities for Alcoa Corp and Centerra Gold
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alcoa and Centerra is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra 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 Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Centerra Gold go up and down completely randomly.
Pair Corralation between Alcoa Corp and Centerra Gold
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.37 times more return on investment than Centerra Gold. However, Alcoa Corp is 1.37 times more volatile than Centerra Gold. It trades about 0.25 of its potential returns per unit of risk. Centerra Gold is currently generating about 0.08 per unit of risk. If you would invest 3,209 in Alcoa Corp on June 29, 2024 and sell it today you would earn a total of 719.00 from holding Alcoa Corp or generate 22.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alcoa Corp vs. Centerra Gold
Performance |
Timeline |
Alcoa Corp |
Centerra Gold |
Alcoa Corp and Centerra Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alcoa Corp and Centerra Gold
The main advantage of trading using opposite Alcoa Corp and Centerra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Centerra 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 Centerra Gold will offset losses from the drop in Centerra Gold's long position.Alcoa Corp vs. Pfizer Inc | Alcoa Corp vs. Mitsubishi Corp | Alcoa Corp vs. Daiwa House Industry | Alcoa Corp vs. HP Inc |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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