Correlation Between Edible Garden and Altria

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

By analyzing existing cross correlation between Edible Garden AG and Altria Group, you can compare the effects of market volatilities on Edible Garden 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 Edible Garden with a short position of Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Altria.

Diversification Opportunities for Edible Garden and Altria

-0.72

Correlation Coefficient

Edible Garden  Altria

Pay attention - limited upside

The 3 months correlation between Edible and Altria is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and Edible Garden 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 Edible Garden AG 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 Edible Garden i.e., Edible Garden and Altria go up and down completely randomly.

Pair Corralation between Edible Garden and Altria

Given the investment horizon of 90 days Edible Garden AG is expected to generate 11.61 times more return on investment than Altria. However, Edible Garden is 11.61 times more volatile than Altria Group. It trades about 0.02 of its potential returns per unit of risk. Altria Group is currently generating about 0.17 per unit of risk. If you would invest  363.00  in Edible Garden AG on December 19, 2024 and sell it today you would lose (98.00) from holding Edible Garden AG or give up 27.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Edible Garden AG  vs.  Altria Group

Edible Garden AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Edible Garden disclosed solid returns over the last few months and may actually be approaching a breakup point.

Altria Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Altria displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edible Garden and Altria

The main advantage of trading using opposite Edible Garden and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden 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 Edible Garden AG 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.