Correlation Between CAVA Group, and Altria
Can any of the company-specific risk be diversified away by investing in both CAVA Group, and Altria 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 CAVA Group, and Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAVA Group, and Altria Group, you can compare the effects of market volatilities on CAVA Group, and Altria 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 CAVA Group, with a short position of Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and Altria.
Diversification Opportunities for CAVA Group, and Altria
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CAVA and Altria is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and CAVA Group, 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 CAVA Group, are associated (or correlated) with Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of CAVA Group, i.e., CAVA Group, and Altria go up and down completely randomly.
Pair Corralation between CAVA Group, and Altria
Given the investment horizon of 90 days CAVA Group, is expected to generate 3.3 times more return on investment than Altria. However, CAVA Group, is 3.3 times more volatile than Altria Group. It trades about 0.13 of its potential returns per unit of risk. Altria Group is currently generating about 0.37 per unit of risk. If you would invest 13,212 in CAVA Group, on September 4, 2024 and sell it today you would earn a total of 873.00 from holding CAVA Group, or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAVA Group, vs. Altria Group
Performance |
| Timeline |
| CAVA Group, |
| Altria Group |
CAVA Group, and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAVA Group, and Altria
The main advantage of trading using opposite CAVA Group, and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, position performs unexpectedly, Altria 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 Altria will offset losses from the drop in Altria's long position.| CAVA Group, vs. Tencent Music Entertainment | CAVA Group, vs. Asbury Automotive Group | CAVA Group, vs. Stagwell | CAVA Group, vs. Fluent Inc |
| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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