Correlation Between Altria and Canon Marketing

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

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

Diversification Opportunities for Altria and Canon Marketing

0.42

Correlation Coefficient

Altria  Canon Marketing

Very weak diversification

The 3 months correlation between Altria and Canon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Canon Marketing Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Marketing Japan 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 Canon Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Marketing Japan has no effect on the direction of Altria i.e., Altria and Canon Marketing go up and down completely randomly.

Pair Corralation between Altria and Canon Marketing

Assuming the 90 days trading horizon Altria Group is expected to generate 1.16 times more return on investment than Canon Marketing. However, Altria is 1.16 times more volatile than Canon Marketing Japan. It trades about 0.08 of its potential returns per unit of risk. Canon Marketing Japan is currently generating about -0.05 per unit of risk. If you would invest  5,019  in Altria Group on December 20, 2024 and sell it today you would earn a total of  328.00  from holding Altria Group or generate 6.54% return on investment over 90 days.

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

Altria Group  vs.  Canon Marketing Japan

Altria Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Altria may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Canon Marketing Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canon Marketing Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canon Marketing is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altria and Canon Marketing

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

The idea behind Altria Group and Canon Marketing Japan 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.