Correlation Between United Parcel and Altria
Can any of the company-specific risk be diversified away by investing in both United Parcel and Altria 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 United Parcel and Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and Altria Group, you can compare the effects of market volatilities on United Parcel 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 United Parcel with a short position of Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Altria.
Diversification Opportunities for United Parcel and Altria
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Altria is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and United Parcel 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 United Parcel Service 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 has no effect on the direction of United Parcel i.e., United Parcel and Altria go up and down completely randomly.
Pair Corralation between United Parcel and Altria
Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the Altria. In addition to that, United Parcel is 1.31 times more volatile than Altria Group. It trades about -0.01 of its total potential returns per unit of risk. Altria Group is currently generating about 0.06 per unit of volatility. If you would invest 20,528 in Altria Group on October 13, 2024 and sell it today you would earn a total of 10,913 from holding Altria Group or generate 53.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.99% |
| Values | Daily Returns |
United Parcel Service vs. Altria Group
Performance |
| Timeline |
| United Parcel Service |
| Altria Group |
United Parcel and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Altria
The main advantage of trading using opposite United Parcel and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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.| United Parcel vs. MAHLE Metal Leve | United Parcel vs. G2D Investments | United Parcel vs. Clover Health Investments, | United Parcel vs. Hospital Mater Dei |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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