Correlation Between ALTRIA and LithiumBank Resources

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Can any of the company-specific risk be diversified away by investing in both ALTRIA and LithiumBank Resources 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 LithiumBank Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALTRIA GROUP INC and LithiumBank Resources Corp, you can compare the effects of market volatilities on ALTRIA and LithiumBank Resources 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 LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTRIA and LithiumBank Resources.

Diversification Opportunities for ALTRIA and LithiumBank Resources

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between ALTRIA and LithiumBank is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ALTRIA GROUP INC and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources 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 INC are associated (or correlated) with LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of ALTRIA i.e., ALTRIA and LithiumBank Resources go up and down completely randomly.

Pair Corralation between ALTRIA and LithiumBank Resources

Assuming the 90 days trading horizon ALTRIA GROUP INC is expected to generate 0.41 times more return on investment than LithiumBank Resources. However, ALTRIA GROUP INC is 2.46 times less risky than LithiumBank Resources. It trades about -0.04 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.16 per unit of risk. If you would invest  8,515  in ALTRIA GROUP INC on September 12, 2024 and sell it today you would lose (890.00) from holding ALTRIA GROUP INC or give up 10.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.39%
ValuesDaily Returns

ALTRIA GROUP INC  vs.  LithiumBank Resources Corp

 Performance 
       Timeline  
ALTRIA GROUP INC 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days ALTRIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for ALTRIA GROUP INC investors.
LithiumBank Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LithiumBank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ALTRIA and LithiumBank Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ALTRIA and LithiumBank Resources

The main advantage of trading using opposite ALTRIA and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTRIA position performs unexpectedly, LithiumBank Resources 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.
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The idea behind ALTRIA GROUP INC and LithiumBank Resources 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.
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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 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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