Correlation Between Altria and Vital Farms

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

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

Diversification Opportunities for Altria and Vital Farms

-0.83

Correlation Coefficient

Altria  Vital Farms

Pay attention - limited upside

The 3 months correlation between Altria and Vital is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Vital Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Farms 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 Vital Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Farms has no effect on the direction of Altria i.e., Altria and Vital Farms go up and down completely randomly.

Pair Corralation between Altria and Vital Farms

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.32 times more return on investment than Vital Farms. However, Altria Group is 3.09 times less risky than Vital Farms. It trades about 0.17 of its potential returns per unit of risk. Vital Farms is currently generating about -0.1 per unit of risk. If you would invest  5,198  in Altria Group on December 19, 2024 and sell it today you would earn a total of  636.00  from holding Altria Group or generate 12.24% 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.  Vital Farms

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.

Vital Farms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Farms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Altria and Vital Farms

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

The idea behind Altria Group and Vital Farms 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.