Correlation Between ATT and ALTRIA
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By analyzing existing cross correlation between ATT Inc and ALTRIA GROUP INC, you can compare the effects of market volatilities on ATT and ALTRIA 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 ATT with a short position of ALTRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and ALTRIA.
Diversification Opportunities for ATT and ALTRIA
Excellent diversification
The 3 months correlation between ATT and ALTRIA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and ALTRIA GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTRIA GROUP INC and ATT 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 ATT Inc are associated (or correlated) with ALTRIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTRIA GROUP INC has no effect on the direction of ATT i.e., ATT and ALTRIA go up and down completely randomly.
Pair Corralation between ATT and ALTRIA
Taking into account the 90-day investment horizon ATT Inc is expected to generate 4.14 times more return on investment than ALTRIA. However, ATT is 4.14 times more volatile than ALTRIA GROUP INC. It trades about 0.25 of its potential returns per unit of risk. ALTRIA GROUP INC is currently generating about -0.18 per unit of risk. If you would invest 2,212 in ATT Inc on September 2, 2024 and sell it today you would earn a total of 104.00 from holding ATT Inc or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
ATT Inc vs. ALTRIA GROUP INC
Performance |
| Timeline |
| ATT Inc |
| ALTRIA GROUP INC |
ATT and ALTRIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and ALTRIA
The main advantage of trading using opposite ATT and ALTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, ALTRIA 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 ALTRIA will offset losses from the drop in ALTRIA's long position.The idea behind ATT Inc and ALTRIA GROUP INC 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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