Correlation Between ALTRIA and Acco Brands

Can any of the company-specific risk be diversified away by investing in both ALTRIA and Acco Brands 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 Acco Brands 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 Acco Brands, you can compare the effects of market volatilities on ALTRIA and Acco Brands 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 Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTRIA and Acco Brands.

Diversification Opportunities for ALTRIA and Acco Brands

0.08

Correlation Coefficient

ALTRIA  Acco Brands

Significant diversification

The 3 months correlation between ALTRIA and Acco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ALTRIA GROUP INC and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands 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 Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of ALTRIA i.e., ALTRIA and Acco Brands go up and down completely randomly.

Pair Corralation between ALTRIA and Acco Brands

Assuming the 90 days trading horizon ALTRIA GROUP INC is expected to generate 0.58 times more return on investment than Acco Brands. However, ALTRIA GROUP INC is 1.71 times less risky than Acco Brands. It trades about -0.49 of its potential returns per unit of risk. Acco Brands is currently generating about -0.64 per unit of risk. If you would invest  7,430  in ALTRIA GROUP INC on October 10, 2024 and sell it today you would lose (635.00) from holding ALTRIA GROUP INC or give up 8.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

ALTRIA GROUP INC  vs.  Acco Brands

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 somewhat strong basic indicators, ALTRIA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Acco Brands

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ALTRIA and Acco Brands

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

The idea behind ALTRIA GROUP INC and Acco Brands 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.