Correlation Between Exxon and Altria Group,

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

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

Diversification Opportunities for Exxon and Altria Group,

0.77

Correlation Coefficient

Exxon  Altria Group,

Poor diversification

The 3 months correlation between Exxon and Altria is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil and Altria Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group, and Exxon 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 Exxon Mobil are associated (or correlated) with Altria Group,. 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 Exxon i.e., Exxon and Altria Group, go up and down completely randomly.

Pair Corralation between Exxon and Altria Group,

Assuming the 90 days trading horizon Exxon is expected to generate 1.4 times less return on investment than Altria Group,. But when comparing it to its historical volatility, Exxon Mobil is 1.1 times less risky than Altria Group,. It trades about 0.08 of its potential returns per unit of risk. Altria Group, is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,726,408  in Altria Group, on April 25, 2025 and sell it today you would earn a total of  166,092  from holding Altria Group, or generate 9.62% return on investment over 90 days.

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

Exxon Mobil  vs.  Altria Group,

Exxon Mobil

Risk-Adjusted Performance

Modest

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

Altria Group,

Risk-Adjusted Performance

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. Despite somewhat weak fundamental drivers, Altria Group, may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Exxon and Altria Group,

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

The idea behind Exxon Mobil 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.