Correlation Between Procter Gamble and Philip Morris
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Philip Morris 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 Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Philip Morris International, you can compare the effects of market volatilities on Procter Gamble and Philip Morris 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 Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Philip Morris.
Diversification Opportunities for Procter Gamble and Philip Morris
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Philip is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern 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 Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of Procter Gamble i.e., Procter Gamble and Philip Morris go up and down completely randomly.
Pair Corralation between Procter Gamble and Philip Morris
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.29 times less return on investment than Philip Morris. But when comparing it to its historical volatility, Procter Gamble is 1.24 times less risky than Philip Morris. It trades about 0.07 of its potential returns per unit of risk. Philip Morris International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,284 in Philip Morris International on August 27, 2024 and sell it today you would earn a total of 3,715 from holding Philip Morris International or generate 40.02% 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. Philip Morris International
Performance |
| Timeline |
| Procter Gamble |
| Philip Morris Intern |
Procter Gamble and Philip Morris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Philip Morris
The main advantage of trading using opposite Procter Gamble and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Philip Morris 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 Philip Morris will offset losses from the drop in Philip Morris' long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |