Correlation Between Altria and Greenlane Holdings

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

By analyzing existing cross correlation between Altria Group and Greenlane Holdings, you can compare the effects of market volatilities on Altria and Greenlane Holdings 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 Greenlane Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Greenlane Holdings.

Diversification Opportunities for Altria and Greenlane Holdings

-0.82

Correlation Coefficient

Altria  Greenlane Holdings

Pay attention - limited upside

The 3 months correlation between Altria and Greenlane is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Greenlane Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Holdings 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 are associated (or correlated) with Greenlane Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Holdings has no effect on the direction of Altria i.e., Altria and Greenlane Holdings go up and down completely randomly.

Pair Corralation between Altria and Greenlane Holdings

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.34 times more return on investment than Greenlane Holdings. However, Altria Group is 2.94 times less risky than Greenlane Holdings. It trades about -0.18 of its potential returns per unit of risk. Greenlane Holdings is currently generating about -0.34 per unit of risk. If you would invest  5,603  in Altria Group on September 22, 2024 and sell it today you would lose (219.00) from holding Altria Group or give up 3.91% of portfolio value over 90 days.

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

Altria Group  vs.  Greenlane Holdings

Altria Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Altria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Greenlane Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenlane Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Altria and Greenlane Holdings

The main advantage of trading using opposite Altria and Greenlane Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Greenlane Holdings 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 Greenlane Holdings will offset losses from the drop in Greenlane Holdings' long position.

The idea behind Altria Group and Greenlane Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..