Correlation Between Alcoa Corp and Big 5

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Big 5 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 Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Big 5 Sporting, you can compare the effects of market volatilities on Alcoa Corp and Big 5 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 Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Big 5.

Diversification Opportunities for Alcoa Corp and Big 5

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Alcoa and Big 5 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting 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 Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Big 5 go up and down completely randomly.

Pair Corralation between Alcoa Corp and Big 5

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.84 times more return on investment than Big 5. However, Alcoa Corp is 1.19 times less risky than Big 5. It trades about 0.06 of its potential returns per unit of risk. Big 5 Sporting is currently generating about 0.04 per unit of risk. If you would invest  2,317  in Alcoa Corp on August 29, 2022 and sell it today you would earn a total of  2,472  from holding Alcoa Corp or generate 106.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Alcoa Corp  vs.  Big 5 Sporting

 Performance (%) 
       Timeline  
Alcoa Corp 
Alcoa Performance
0 of 100
Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alcoa Price Channel

Big 5 Sporting 
Big 5 Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Big 5 Sporting are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Big 5 may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Big 5 Price Channel

Alcoa Corp and Big 5 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and Big 5

The main advantage of trading using opposite Alcoa Corp and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.
Alcoa Corp vs. Arconic Corp
Alcoa Corp vs. Ati Inc
Alcoa Corp vs. Carpenter Technology Corp
Alcoa Corp vs. Reliance Steel Aluminum
The idea behind Alcoa Corp and Big 5 Sporting 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.
Big 5 vs. Ulta Beauty
Big 5 vs. Best Buy Company
Big 5 vs. Tractor Supply
Big 5 vs. Genuine Parts
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

Other Complementary Tools

Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go