Correlation Between Altria and Cannae Holdings
Can any of the company-specific risk be diversified away by investing in both Altria and Cannae Holdings 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 Cannae Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Cannae Holdings, you can compare the effects of market volatilities on Altria and Cannae Holdings 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 Cannae Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Cannae Holdings.
Diversification Opportunities for Altria and Cannae Holdings
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Altria and Cannae is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Cannae Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannae Holdings 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 Cannae Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannae Holdings has no effect on the direction of Altria i.e., Altria and Cannae Holdings go up and down completely randomly.
Pair Corralation between Altria and Cannae Holdings
Allowing for the 90-day total investment horizon Altria is expected to generate 1.42 times less return on investment than Cannae Holdings. But when comparing it to its historical volatility, Altria Group is 2.02 times less risky than Cannae Holdings. It trades about 0.37 of its potential returns per unit of risk. Cannae Holdings is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,994 in Cannae Holdings on September 4, 2024 and sell it today you would earn a total of 172.00 from holding Cannae Holdings or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. Cannae Holdings
Performance |
| Timeline |
| Altria Group |
| Cannae Holdings |
Altria and Cannae Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and Cannae Holdings
The main advantage of trading using opposite Altria and Cannae Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Cannae Holdings 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 Cannae Holdings will offset losses from the drop in Cannae Holdings' long position.| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
| Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. Hamilton Lane | Cannae Holdings vs. ConnectOne Bancorp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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