Correlation Between Altria and Oatly Group

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

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

Diversification Opportunities for Altria and Oatly Group

-0.11

Correlation Coefficient

Altria  Oatly Group

Good diversification

The 3 months correlation between Altria and Oatly is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group 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 Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Altria i.e., Altria and Oatly Group go up and down completely randomly.

Pair Corralation between Altria and Oatly Group

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.13 times more return on investment than Oatly Group. However, Altria Group is 7.6 times less risky than Oatly Group. It trades about 0.0 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.01 per unit of risk. If you would invest  5,609  in Altria Group on December 1, 2024 and sell it today you would lose (24.00) from holding Altria Group or give up 0.43% of portfolio value over 90 days.

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

Altria Group  vs.  Oatly Group AB

Altria Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altria Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Oatly Group AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Altria and Oatly Group

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

The idea behind Altria Group and Oatly Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.