Correlation Between 22nd Century and Altria

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Can any of the company-specific risk be diversified away by investing in both 22nd Century 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 22nd Century and Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 22nd Century Group and Altria Group, you can compare the effects of market volatilities on 22nd Century 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 22nd Century with a short position of Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and Altria.

Diversification Opportunities for 22nd Century and Altria

-0.85
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between 22nd and Altria is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century Group and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and 22nd Century 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 22nd Century 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 22nd Century i.e., 22nd Century and Altria go up and down completely randomly.

Pair Corralation between 22nd Century and Altria

Given the investment horizon of 90 days 22nd Century Group is expected to under-perform the Altria. In addition to that, 22nd Century is 9.29 times more volatile than Altria Group. It trades about -0.11 of its total potential returns per unit of risk. Altria Group is currently generating about 0.14 per unit of volatility. If you would invest  5,145  in Altria Group on December 27, 2024 and sell it today you would earn a total of  526.00  from holding Altria Group or generate 10.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

22nd Century Group  vs.  Altria Group

 Performance 
       Timeline  
22nd Century Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days 22nd Century Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Altria Group 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 11 (%) 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 April 2025.

22nd Century and Altria Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 22nd Century and Altria

The main advantage of trading using opposite 22nd Century and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century 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 22nd Century 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.
Check out your portfolio center.
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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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