Correlation Between Altria and Vita Coco
Can any of the company-specific risk be diversified away by investing in both Altria and Vita Coco 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 Vita Coco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Vita Coco, you can compare the effects of market volatilities on Altria and Vita Coco 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 Vita Coco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Vita Coco.
Diversification Opportunities for Altria and Vita Coco
Poor diversification
The 3 months correlation between Altria and Vita is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco 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 Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of Altria i.e., Altria and Vita Coco go up and down completely randomly.
Pair Corralation between Altria and Vita Coco
Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.47 times more return on investment than Vita Coco. However, Altria Group is 2.13 times less risky than Vita Coco. It trades about 0.18 of its potential returns per unit of risk. Vita Coco is currently generating about 0.08 per unit of risk. If you would invest 4,468 in Altria Group on September 1, 2024 and sell it today you would earn a total of 1,306 from holding Altria Group or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. Vita Coco
Performance |
| Timeline |
| Altria Group |
| Vita Coco |
Altria and Vita Coco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and Vita Coco
The main advantage of trading using opposite Altria and Vita Coco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Vita Coco 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 Vita Coco will offset losses from the drop in Vita Coco's long position.| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. National Beverage Corp | Vita Coco vs. Embotelladora Andina SA |
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 CEOs Directory module to screen CEOs from public companies around the world.
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