Correlation Between Altria and Mason Graphite

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

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

Diversification Opportunities for Altria and Mason Graphite

-0.49

Correlation Coefficient

Altria  Mason Graphite

Very good diversification

The 3 months correlation between Altria and Mason is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite 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 Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Altria i.e., Altria and Mason Graphite go up and down completely randomly.

Pair Corralation between Altria and Mason Graphite

Allowing for the 90-day total investment horizon Altria is expected to generate 2.25 times less return on investment than Mason Graphite. But when comparing it to its historical volatility, Altria Group is 7.94 times less risky than Mason Graphite. It trades about 0.17 of its potential returns per unit of risk. Mason Graphite is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.96  in Mason Graphite on January 18, 2025 and sell it today you would lose (0.02) from holding Mason Graphite or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Altria Group  vs.  Mason Graphite

Altria Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Altria displayed solid returns over the last few months and may actually be approaching a breakup point.

Mason Graphite

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mason Graphite are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Mason Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altria and Mason Graphite

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

The idea behind Altria Group and Mason Graphite 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.