Correlation Between Alcoa Corp and MASSMUTUAL SELECT

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Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and MASSMUTUAL SELECT 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 MASSMUTUAL SELECT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and MASSMUTUAL SELECT SMALL, you can compare the effects of market volatilities on Alcoa Corp and MASSMUTUAL SELECT 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 MASSMUTUAL SELECT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and MASSMUTUAL SELECT.

Diversification Opportunities for Alcoa Corp and MASSMUTUAL SELECT

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Alcoa and MASSMUTUAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and MASSMUTUAL SELECT SMALL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSMUTUAL SELECT SMALL 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 MASSMUTUAL SELECT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSMUTUAL SELECT SMALL has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and MASSMUTUAL SELECT go up and down completely randomly.

Pair Corralation between Alcoa Corp and MASSMUTUAL SELECT

If you would invest  4,151  in Alcoa Corp on September 6, 2022 and sell it today you would earn a total of  501.00  from holding Alcoa Corp or generate 12.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Alcoa Corp  vs.  MASSMUTUAL SELECT SMALL

 Performance (%) 
       Timeline  
Alcoa Corp 
Alcoa Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alcoa Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alcoa Price Channel

MASSMUTUAL SELECT SMALL 
MASSMUTUAL Performance
0 of 100
Over the last 90 days MASSMUTUAL SELECT SMALL has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, MASSMUTUAL SELECT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alcoa Corp and MASSMUTUAL SELECT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and MASSMUTUAL SELECT

The main advantage of trading using opposite Alcoa Corp and MASSMUTUAL SELECT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, MASSMUTUAL SELECT 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 MASSMUTUAL SELECT will offset losses from the drop in MASSMUTUAL SELECT's long position.
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The idea behind Alcoa Corp and MASSMUTUAL SELECT SMALL 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against MASSMUTUAL SELECT as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. MASSMUTUAL SELECT's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, MASSMUTUAL SELECT's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to MASSMUTUAL SELECT SMALL.
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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