Correlation Between NRX Pharmaceuticals and Altria

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

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

Diversification Opportunities for NRX Pharmaceuticals and Altria

-0.09

Correlation Coefficient

NRX Pharmaceuticals  Altria

Good diversification

The 3 months correlation between NRX and Altria is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NRX Pharmaceuticals and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and NRX Pharmaceuticals 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 NRX Pharmaceuticals are associated (or correlated) with Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of NRX Pharmaceuticals i.e., NRX Pharmaceuticals and Altria go up and down completely randomly.

Pair Corralation between NRX Pharmaceuticals and Altria

Given the investment horizon of 90 days NRX Pharmaceuticals is expected to generate 18.2 times more return on investment than Altria. However, NRX Pharmaceuticals is 18.2 times more volatile than Altria Group. It trades about 0.42 of its potential returns per unit of risk. Altria Group is currently generating about -0.29 per unit of risk. If you would invest  121.00  in NRX Pharmaceuticals on October 9, 2024 and sell it today you would earn a total of  230.00  from holding NRX Pharmaceuticals or generate 190.08% return on investment over 90 days.

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

NRX Pharmaceuticals  vs.  Altria Group

NRX Pharmaceuticals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NRX Pharmaceuticals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, NRX Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Altria Group

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Altria may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NRX Pharmaceuticals and Altria

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

The idea behind NRX Pharmaceuticals and Altria Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.