Correlation Between Altria and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Altria and Consumer Staples 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 Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Consumer Staples Portfolio, you can compare the effects of market volatilities on Altria and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Consumer Staples.
Diversification Opportunities for Altria and Consumer Staples
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Altria and Consumer is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Altria i.e., Altria and Consumer Staples go up and down completely randomly.
Pair Corralation between Altria and Consumer Staples
Allowing for the 90-day total investment horizon Altria Group is expected to generate 1.58 times more return on investment than Consumer Staples. However, Altria is 1.58 times more volatile than Consumer Staples Portfolio. It trades about 0.08 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.04 per unit of risk. If you would invest 3,956 in Altria Group on August 31, 2024 and sell it today you would earn a total of 1,809 from holding Altria Group or generate 45.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Altria Group |
| Consumer Staples Por |
Altria and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and Consumer Staples
The main advantage of trading using opposite Altria and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
| Consumer Staples vs. Fidelity Advisor Health | Consumer Staples vs. Fidelity Advisor Biotechnology | Consumer Staples vs. Materials Portfolio Fidelity | Consumer Staples vs. Consumer Staples Portfolio |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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