Correlation Between Altria and Target

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

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

Diversification Opportunities for Altria and Target

-0.94

Correlation Coefficient

Altria  Target

Pay attention - limited upside

The 3 months correlation between Altria and Target is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Altria i.e., Altria and Target go up and down completely randomly.

Pair Corralation between Altria and Target

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.68 times more return on investment than Target. However, Altria Group is 1.47 times less risky than Target. It trades about 0.17 of its potential returns per unit of risk. Target is currently generating about -0.21 per unit of risk. If you would invest  5,116  in Altria Group on December 28, 2024 and sell it today you would earn a total of  659.00  from holding Altria Group or generate 12.88% return on investment over 90 days.

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

Altria Group  vs.  Target

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.

Target

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Altria and Target

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

The idea behind Altria Group and Target 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.