Correlation Between Altria and PriceSmart
Can any of the company-specific risk be diversified away by investing in both Altria and PriceSmart 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 PriceSmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and PriceSmart, you can compare the effects of market volatilities on Altria and PriceSmart 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 PriceSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and PriceSmart.
Diversification Opportunities for Altria and PriceSmart
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Altria and PriceSmart is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and PriceSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PriceSmart 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 PriceSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PriceSmart has no effect on the direction of Altria i.e., Altria and PriceSmart go up and down completely randomly.
Pair Corralation between Altria and PriceSmart
Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.8 times more return on investment than PriceSmart. However, Altria Group is 1.26 times less risky than PriceSmart. It trades about 0.33 of its potential returns per unit of risk. PriceSmart is currently generating about 0.01 per unit of risk. If you would invest 5,025 in Altria Group on August 27, 2024 and sell it today you would earn a total of 650.00 from holding Altria Group or generate 12.94% 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. PriceSmart
Performance |
| Timeline |
| Altria Group |
| PriceSmart |
Altria and PriceSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altria and PriceSmart
The main advantage of trading using opposite Altria and PriceSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, PriceSmart 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 PriceSmart will offset losses from the drop in PriceSmart's long position.| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
| PriceSmart vs. Wal Mart de | PriceSmart vs. Pan Pacific International | PriceSmart vs. Dollarama | PriceSmart vs. Dollar General |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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