Correlation Between Altria and John B

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

By analyzing existing cross correlation between Altria Group and John B Sanfilippo, you can compare the effects of market volatilities on Altria and John B 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 John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and John B.

Diversification Opportunities for Altria and John B

-0.69

Correlation Coefficient

Altria  John B

Excellent diversification

The 3 months correlation between Altria and John is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo 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 John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of Altria i.e., Altria and John B go up and down completely randomly.

Pair Corralation between Altria and John B

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.56 times more return on investment than John B. However, Altria Group is 1.79 times less risky than John B. It trades about 0.16 of its potential returns per unit of risk. John B Sanfilippo is currently generating about -0.14 per unit of risk. If you would invest  5,145  in Altria Group on December 27, 2024 and sell it today you would earn a total of  630.00  from holding Altria Group or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Altria Group  vs.  John B Sanfilippo

Altria Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 12 (%) 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.

John B Sanfilippo

Risk-Adjusted Performance

Very Weak

Over the last 90 days John B Sanfilippo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Altria and John B

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

The idea behind Altria Group and John B Sanfilippo 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.