Correlation Between Altria and BRC
Can any of the company-specific risk be diversified away by investing in both Altria and BRC 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 BRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and BRC Inc, you can compare the effects of market volatilities on Altria and BRC 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 BRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and BRC.
Diversification Opportunities for Altria and BRC
Excellent diversification
The 3 months correlation between Altria and BRC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and BRC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC Inc 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 BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC Inc has no effect on the direction of Altria i.e., Altria and BRC go up and down completely randomly.
Pair Corralation between Altria and BRC
Allowing for the 90-day total investment horizon Altria Group is expected to under-perform the BRC. But the stock apears to be less risky and, when comparing its historical volatility, Altria Group is 2.54 times less risky than BRC. The stock trades about -0.29 of its potential returns per unit of risk. The BRC Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 297.00 in BRC Inc on October 11, 2024 and sell it today you would earn a total of 20.00 from holding BRC Inc or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. BRC Inc
Performance |
| Timeline |
| Altria Group |
| BRC Inc |
Altria and BRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and BRC
The main advantage of trading using opposite Altria and BRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, BRC 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 BRC will offset losses from the drop in BRC's long position.| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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