Correlation Between Top Wealth and Altria

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

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

Diversification Opportunities for Top Wealth and Altria

-0.62

Correlation Coefficient

Top Wealth  Altria

Excellent diversification

The 3 months correlation between Top and Altria is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Top Wealth Group and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and Top Wealth 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 Top Wealth Group 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 Top Wealth i.e., Top Wealth and Altria go up and down completely randomly.

Pair Corralation between Top Wealth and Altria

Considering the 90-day investment horizon Top Wealth Group is expected to generate 7.68 times more return on investment than Altria. However, Top Wealth is 7.68 times more volatile than Altria Group. It trades about 0.06 of its potential returns per unit of risk. Altria Group is currently generating about -0.29 per unit of risk. If you would invest  26.00  in Top Wealth Group on October 9, 2024 and sell it today you would earn a total of  1.00  from holding Top Wealth Group or generate 3.85% return on investment over 90 days.

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

Top Wealth Group  vs.  Altria Group

Top Wealth Group

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Top Wealth Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Top Wealth 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 Top Wealth and Altria

The main advantage of trading using opposite Top Wealth and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Wealth 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 Top Wealth Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.