Correlation Between Altria and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Altria and ConAgra Foods 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 ConAgra Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and ConAgra Foods, you can compare the effects of market volatilities on Altria and ConAgra Foods 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 ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and ConAgra Foods.
Diversification Opportunities for Altria and ConAgra Foods
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Altria and ConAgra is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods 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 are associated (or correlated) with ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Altria i.e., Altria and ConAgra Foods go up and down completely randomly.
Pair Corralation between Altria and ConAgra Foods
Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.92 times more return on investment than ConAgra Foods. However, Altria Group is 1.09 times less risky than ConAgra Foods. It trades about 0.03 of its potential returns per unit of risk. ConAgra Foods is currently generating about 0.0 per unit of risk. If you would invest 3,642 in Altria Group on January 19, 2024 and sell it today you would earn a total of 488.00 from holding Altria Group or generate 13.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Altria Group vs. ConAgra Foods
Performance |
Timeline |
Altria Group |
ConAgra Foods |
Altria and ConAgra Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Altria and ConAgra Foods
The main advantage of trading using opposite Altria and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Japan Tobacco ADR | Altria vs. Imperial Brands PLC |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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