Correlation Between Altria and Local Bounti
Can any of the company-specific risk be diversified away by investing in both Altria and Local Bounti 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 Local Bounti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Local Bounti Corp, you can compare the effects of market volatilities on Altria and Local Bounti 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 Local Bounti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Local Bounti.
Diversification Opportunities for Altria and Local Bounti
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Altria and Local is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Local Bounti Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Local Bounti Corp 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 Local Bounti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Local Bounti Corp has no effect on the direction of Altria i.e., Altria and Local Bounti go up and down completely randomly.
Pair Corralation between Altria and Local Bounti
Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.51 times more return on investment than Local Bounti. However, Altria Group is 1.97 times less risky than Local Bounti. It trades about 0.31 of its potential returns per unit of risk. Local Bounti Corp is currently generating about -0.45 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altria Group vs. Local Bounti Corp
Performance |
| Timeline |
| Altria Group |
| Local Bounti Corp |
Altria and Local Bounti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and Local Bounti
The main advantage of trading using opposite Altria and Local Bounti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Local Bounti 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 Local Bounti will offset losses from the drop in Local Bounti's long position.The idea behind Altria Group and Local Bounti Corp 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.| Local Bounti vs. Fresh Del Monte | Local Bounti vs. Alico Inc | Local Bounti vs. SW Seed Company | Local Bounti vs. Adecoagro 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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