Correlation Between Alcoa Corp and Noranda Aluminum
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Noranda Aluminum 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 Noranda Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Noranda Aluminum Holding, you can compare the effects of market volatilities on Alcoa Corp and Noranda Aluminum 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 Noranda Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Noranda Aluminum.
Diversification Opportunities for Alcoa Corp and Noranda Aluminum
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and Noranda is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Noranda Aluminum Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noranda Aluminum Holding 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 Noranda Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noranda Aluminum Holding has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Noranda Aluminum go up and down completely randomly.
Pair Corralation between Alcoa Corp and Noranda Aluminum
If you would invest 3,158 in Alcoa Corp on January 26, 2024 and sell it today you would earn a total of 450.00 from holding Alcoa Corp or generate 14.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Alcoa Corp vs. Noranda Aluminum Holding
Performance |
| Timeline |
| Alcoa Corp |
| Noranda Aluminum Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alcoa Corp and Noranda Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Noranda Aluminum
The main advantage of trading using opposite Alcoa Corp and Noranda Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Noranda Aluminum 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 Noranda Aluminum will offset losses from the drop in Noranda Aluminum's long position.| Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
| Noranda Aluminum vs. Loandepot | Noranda Aluminum vs. Lend Lease Group | Noranda Aluminum vs. Alta Equipment Group | Noranda Aluminum vs. Mitsubishi UFJ Lease |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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