Correlation Between Altria and Husqvarna

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

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

Diversification Opportunities for Altria and Husqvarna

0.0

Correlation Coefficient

Altria  Husqvarna

Pay attention - limited upside

The 3 months correlation between Altria and Husqvarna is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Husqvarna AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husqvarna AB 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 Husqvarna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husqvarna AB has no effect on the direction of Altria i.e., Altria and Husqvarna go up and down completely randomly.

Pair Corralation between Altria and Husqvarna

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.31 times more return on investment than Husqvarna. However, Altria Group is 3.27 times less risky than Husqvarna. It trades about 0.12 of its potential returns per unit of risk. Husqvarna AB is currently generating about 0.02 per unit of risk. If you would invest  3,773  in Altria Group on October 9, 2024 and sell it today you would earn a total of  1,373  from holding Altria Group or generate 36.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	74.49%
Values	Daily Returns

Altria Group  vs.  Husqvarna AB

Altria Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 4 (%) 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.

Husqvarna AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Husqvarna AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Husqvarna is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altria and Husqvarna

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

The idea behind Altria Group and Husqvarna AB 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.