Correlation Between Alcoa Corp and International Business

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

Diversification Opportunities for Alcoa Corp and International Business

  Correlation Coefficient

Poor diversification

The 23 months correlation between Alcoa and International is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and International Business go up and down completely randomly.

Pair Corralation between Alcoa Corp and International Business

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.91 times more return on investment than International Business. However, Alcoa Corp is 1.91 times more volatile than International Business Machines. It trades about 0.33 of its potential returns per unit of risk. International Business Machines is currently generating about -0.03 per unit of risk. If you would invest  4,310  in Alcoa Corp on May 14, 2022 and sell it today you would earn a total of  966.00  from holding Alcoa Corp or generate 22.41% return on investment over 90 days.
Time Period23 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Alcoa Corp  vs.  International Business Machine

 Performance (%) 
Alcoa Corp 
Alcoa Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Alcoa Price Channel

International Business 
International Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady fundamental drivers, International Business is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

International Price Channel

Alcoa Corp and International Business Volatility Contrast

   Predicted Return Density   

Pair Trading with Alcoa Corp and International Business

The main advantage of trading using opposite Alcoa Corp and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
The idea behind Alcoa Corp and International Business Machines 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.
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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