Correlation Between Campbell Soup and Altria
Can any of the company-specific risk be diversified away by investing in both Campbell Soup 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 Campbell Soup and Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Campbell Soup and Altria Group, you can compare the effects of market volatilities on Campbell Soup 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 Campbell Soup with a short position of Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and Altria.
Diversification Opportunities for Campbell Soup and Altria
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Campbell and Altria is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and Campbell Soup 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 Campbell Soup 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 Campbell Soup i.e., Campbell Soup and Altria go up and down completely randomly.
Pair Corralation between Campbell Soup and Altria
Considering the 90-day investment horizon Campbell Soup is expected to generate 3.81 times less return on investment than Altria. In addition to that, Campbell Soup is 1.25 times more volatile than Altria Group. It trades about 0.03 of its total potential returns per unit of risk. Altria Group is currently generating about 0.13 per unit of volatility. If you would invest 3,746 in Altria Group on September 14, 2024 and sell it today you would earn a total of 1,746 from holding Altria Group or generate 46.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Campbell Soup vs. Altria Group
Performance |
| Timeline |
| Campbell Soup |
| Altria Group |
Campbell Soup and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Campbell Soup and Altria
The main advantage of trading using opposite Campbell Soup and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campbell Soup 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.The idea behind Campbell Soup and Altria Group 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.| 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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