Correlation Between Alcoa Corp and Ideanomics

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

Diversification Opportunities for Alcoa Corp and Ideanomics

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Alcoa and Ideanomics is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Ideanomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideanomics 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 Ideanomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideanomics has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Ideanomics go up and down completely randomly.

Pair Corralation between Alcoa Corp and Ideanomics

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.95 times more return on investment than Ideanomics. However, Alcoa Corp is 1.06 times less risky than Ideanomics. It trades about -0.48 of its potential returns per unit of risk. Ideanomics is currently generating about -0.65 per unit of risk. If you would invest  5,550  in Alcoa Corp on June 29, 2022 and sell it today you would lose (2,103)  from holding Alcoa Corp or give up 37.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Alcoa Corp  vs.  Ideanomics

 Performance (%) 
       Timeline  
Alcoa Corp 
Alcoa Performance
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Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Alcoa Price Channel

Ideanomics 
Ideanomics Performance
0 of 100
Over the last 90 days Ideanomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Ideanomics Price Channel

Alcoa Corp and Ideanomics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and Ideanomics

The main advantage of trading using opposite Alcoa Corp and Ideanomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Ideanomics 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 Ideanomics will offset losses from the drop in Ideanomics' long position.
Alcoa Corp vs. Kibush Capital Corp
The idea behind Alcoa Corp and Ideanomics 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.
Ideanomics vs. Clearwater Paper Corp
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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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