Correlation Between Air Transport and ALTRIA

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

By analyzing existing cross correlation between Air Transport Services and ALTRIA GROUP INC, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of ALTRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and ALTRIA.

Diversification Opportunities for Air Transport and ALTRIA

-0.37

Correlation Coefficient

Air Transport  ALTRIA

Very good diversification

The 3 months correlation between Air and ALTRIA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and ALTRIA GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTRIA GROUP INC and Air Transport 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 Air Transport Services 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 INC has no effect on the direction of Air Transport i.e., Air Transport and ALTRIA go up and down completely randomly.

Pair Corralation between Air Transport and ALTRIA

Given the investment horizon of 90 days Air Transport Services is expected to generate 0.18 times more return on investment than ALTRIA. However, Air Transport Services is 5.59 times less risky than ALTRIA. It trades about -0.13 of its potential returns per unit of risk. ALTRIA GROUP INC is currently generating about -0.27 per unit of risk. If you would invest  2,223  in Air Transport Services on October 10, 2024 and sell it today you would lose (20.00) from holding Air Transport Services or give up 0.9% of portfolio value over 90 days.

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

Air Transport Services  vs.  ALTRIA GROUP INC

Air Transport Services

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Air Transport and ALTRIA

The main advantage of trading using opposite Air Transport and ALTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services and ALTRIA GROUP INC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.