Correlation Between Altria and Bon Natural
Can any of the company-specific risk be diversified away by investing in both Altria and Bon Natural 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 Altria and Bon Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Bon Natural Life, you can compare the effects of market volatilities on Altria and Bon Natural 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 Altria with a short position of Bon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Bon Natural.
Diversification Opportunities for Altria and Bon Natural
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Altria and Bon is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life and Altria 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 Altria Group are associated (or correlated) with Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Altria i.e., Altria and Bon Natural go up and down completely randomly.
Pair Corralation between Altria and Bon Natural
Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.44 times more return on investment than Bon Natural. However, Altria Group is 2.29 times less risky than Bon Natural. It trades about 0.31 of its potential returns per unit of risk. Bon Natural Life is currently generating about 0.11 per unit of risk. If you would invest 4,980 in Altria Group on August 24, 2024 and sell it today you would earn a total of 623.00 from holding Altria Group or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. Bon Natural Life
Performance |
| Timeline |
| Altria Group |
| Bon Natural Life |
Altria and Bon Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and Bon Natural
The main advantage of trading using opposite Altria and Bon Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Bon Natural 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 Bon Natural will offset losses from the drop in Bon Natural's long position.The idea behind Altria Group and Bon Natural Life 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.| Bon Natural vs. Blue Star Foods | Bon Natural vs. Grand Havana | Bon Natural vs. Real Good Food | Bon Natural vs. Central Garden Pet |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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