Correlation Between Altria and Brasilagro Adr

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

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

Diversification Opportunities for Altria and Brasilagro Adr

-0.24

Correlation Coefficient

Altria  Brasilagro Adr

Very good diversification

The 3 months correlation between Altria and Brasilagro is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Brasilagro Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brasilagro Adr 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 Brasilagro Adr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brasilagro Adr has no effect on the direction of Altria i.e., Altria and Brasilagro Adr go up and down completely randomly.

Pair Corralation between Altria and Brasilagro Adr

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.59 times more return on investment than Brasilagro Adr. However, Altria Group is 1.7 times less risky than Brasilagro Adr. It trades about 0.06 of its potential returns per unit of risk. Brasilagro Adr is currently generating about -0.02 per unit of risk. If you would invest  3,779  in Altria Group on October 15, 2024 and sell it today you would earn a total of  1,308  from holding Altria Group or generate 34.61% return on investment over 90 days.

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

Altria Group  vs.  Brasilagro Adr

Altria Group

Risk-Adjusted Performance

4 of 100

Insignificant

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.

Brasilagro Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brasilagro Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Altria and Brasilagro Adr

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

The idea behind Altria Group and Brasilagro Adr 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.