Correlation Between Rogers and Altria

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

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

Diversification Opportunities for Rogers and Altria

0.19

Correlation Coefficient

Rogers  Altria

Average diversification

The 3 months correlation between Rogers and Altria is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Rogers and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and Rogers 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 Rogers 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 Rogers i.e., Rogers and Altria go up and down completely randomly.

Pair Corralation between Rogers and Altria

Considering the 90-day investment horizon Rogers is expected to under-perform the Altria. In addition to that, Rogers is 1.86 times more volatile than Altria Group. It trades about -0.15 of its total potential returns per unit of risk. Altria Group is currently generating about 0.0 per unit of volatility. If you would invest  5,325  in Altria Group on October 7, 2024 and sell it today you would lose (11.00) from holding Altria Group or give up 0.21% of portfolio value over 90 days.

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

Rogers  vs.  Altria Group

Rogers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rogers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Altria Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 8 (%) 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 Rogers and Altria

The main advantage of trading using opposite Rogers and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rogers 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 Rogers 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.