Correlation Between ALTRIA and Boston Beer

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

By analyzing existing cross correlation between ALTRIA GROUP INC and Boston Beer, you can compare the effects of market volatilities on ALTRIA and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTRIA and Boston Beer.

Diversification Opportunities for ALTRIA and Boston Beer

-0.09

Correlation Coefficient

ALTRIA  Boston Beer

Good diversification

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

Pair Corralation between ALTRIA and Boston Beer

Assuming the 90 days trading horizon ALTRIA GROUP INC is expected to under-perform the Boston Beer. In addition to that, ALTRIA is 1.2 times more volatile than Boston Beer. It trades about -0.12 of its total potential returns per unit of risk. Boston Beer is currently generating about 0.02 per unit of volatility. If you would invest  27,796  in Boston Beer on October 10, 2024 and sell it today you would earn a total of  317.00  from holding Boston Beer or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

ALTRIA GROUP INC  vs.  Boston Beer

ALTRIA GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTRIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for ALTRIA GROUP INC investors.

Boston Beer

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Boston Beer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ALTRIA and Boston Beer

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

The idea behind ALTRIA GROUP INC and Boston Beer 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.