Correlation Between Aptiv PLC and ALTRIA

Can any of the company-specific risk be diversified away by investing in both Aptiv PLC 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 Aptiv PLC and ALTRIA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aptiv PLC and ALTRIA GROUP INC, you can compare the effects of market volatilities on Aptiv PLC 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 Aptiv PLC with a short position of ALTRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and ALTRIA.

Diversification Opportunities for Aptiv PLC and ALTRIA

-0.14

Correlation Coefficient

Aptiv PLC  ALTRIA

Good diversification

The 3 months correlation between Aptiv and ALTRIA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC i.e., Aptiv PLC and ALTRIA go up and down completely randomly.

Pair Corralation between Aptiv PLC and ALTRIA

Given the investment horizon of 90 days Aptiv PLC is expected to generate 1.69 times more return on investment than ALTRIA. However, Aptiv PLC is 1.69 times more volatile than ALTRIA GROUP INC. It trades about -0.04 of its potential returns per unit of risk. ALTRIA GROUP INC is currently generating about -0.09 per unit of risk. If you would invest  6,931  in Aptiv PLC on October 25, 2024 and sell it today you would lose (658.00) from holding Aptiv PLC or give up 9.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Aptiv PLC  vs.  ALTRIA GROUP INC

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

ALTRIA GROUP INC

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALTRIA GROUP INC investors.

Pair Trading with Aptiv PLC and ALTRIA

The main advantage of trading using opposite Aptiv PLC and ALTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC 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 Aptiv PLC 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.