Correlation Between Marine Products and ALTRIA

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

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

Diversification Opportunities for Marine Products and ALTRIA

0.52

Correlation Coefficient

Marine Products  ALTRIA

Very weak diversification

The 3 months correlation between Marine and ALTRIA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products 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 Marine Products 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 Marine Products 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 Marine Products i.e., Marine Products and ALTRIA go up and down completely randomly.

Pair Corralation between Marine Products and ALTRIA

Considering the 90-day investment horizon Marine Products is expected to under-perform the ALTRIA. In addition to that, Marine Products is 2.1 times more volatile than ALTRIA GROUP INC. It trades about -0.01 of its total potential returns per unit of risk. ALTRIA GROUP INC is currently generating about 0.01 per unit of volatility. If you would invest  6,357  in ALTRIA GROUP INC on October 10, 2024 and sell it today you would earn a total of  54.00  from holding ALTRIA GROUP INC or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.94%
Values	Daily Returns

Marine Products  vs.  ALTRIA GROUP INC

Marine Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALTRIA GROUP INC investors.

Pair Trading with Marine Products and ALTRIA

The main advantage of trading using opposite Marine Products and ALTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products 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 Marine Products 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.