Correlation Between Procter Gamble and Altria

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

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

Diversification Opportunities for Procter Gamble and Altria

-0.21

Correlation Coefficient

Procter Gamble  Altria

Very good diversification

The 3 months correlation between Procter and Altria is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and Procter Gamble 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 Procter Gamble 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 has no effect on the direction of Procter Gamble i.e., Procter Gamble and Altria go up and down completely randomly.

Pair Corralation between Procter Gamble and Altria

Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Altria. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 1.28 times less risky than Altria. The stock trades about -0.07 of its potential returns per unit of risk. The Altria Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,945  in Altria Group on May 6, 2025 and sell it today you would earn a total of  233.00  from holding Altria Group or generate 3.92% return on investment over 90 days.

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

Procter Gamble  vs.  Altria Group

Procter Gamble

Risk-Adjusted Performance

Very Weak

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

Altria Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Altria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Procter Gamble and Altria

The main advantage of trading using opposite Procter Gamble and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 Procter Gamble and Altria Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..