Correlation Between Altria and JM Smucker

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

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

Diversification Opportunities for Altria and JM Smucker

-0.3

Correlation Coefficient

Altria  JM Smucker

Very good diversification

The 3 months correlation between Altria and SJM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker 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 JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Altria i.e., Altria and JM Smucker go up and down completely randomly.

Pair Corralation between Altria and JM Smucker

Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.84 times more return on investment than JM Smucker. However, Altria Group is 1.19 times less risky than JM Smucker. It trades about 0.01 of its potential returns per unit of risk. JM Smucker is currently generating about -0.08 per unit of risk. If you would invest  4,260  in Altria Group on January 28, 2024 and sell it today you would earn a total of  78.00  from holding Altria Group or generate 1.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Altria Group  vs.  JM Smucker

Altria Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Altria may actually be approaching a critical reversion point that can send shares even higher in May 2024.

JM Smucker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JM Smucker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Altria and JM Smucker

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

The idea behind Altria Group and JM Smucker 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.