Correlation Between Veren and Altria
Can any of the company-specific risk be diversified away by investing in both Veren 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 Veren and Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veren Inc and Altria Group, you can compare the effects of market volatilities on Veren 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 Veren with a short position of Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veren and Altria.
Diversification Opportunities for Veren and Altria
Excellent diversification
The 3 months correlation between Veren and Altria is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Veren Inc and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and Veren 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 Veren 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 has no effect on the direction of Veren i.e., Veren and Altria go up and down completely randomly.
Pair Corralation between Veren and Altria
Considering the 90-day investment horizon Veren Inc is expected to under-perform the Altria. In addition to that, Veren is 2.03 times more volatile than Altria Group. It trades about -0.12 of its total potential returns per unit of risk. Altria Group is currently generating about 0.17 per unit of volatility. If you would invest 4,479 in Altria Group on September 3, 2024 and sell it today you would earn a total of 1,239 from holding Altria Group or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veren Inc vs. Altria Group
Performance |
| Timeline |
| Veren Inc |
| Altria Group |
Veren and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veren and Altria
The main advantage of trading using opposite Veren and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veren 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 Veren Inc and Altria Group 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.| Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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