Correlation Between Philip Morris and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Consumer Staples 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 Philip Morris and Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philip Morris International and Consumer Staples Portfolio, you can compare the effects of market volatilities on Philip Morris and Consumer Staples 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 Philip Morris with a short position of Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Consumer Staples.
Diversification Opportunities for Philip Morris and Consumer Staples
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Philip and Consumer is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Philip Morris 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 Philip Morris International are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Philip Morris i.e., Philip Morris and Consumer Staples go up and down completely randomly.
Pair Corralation between Philip Morris and Consumer Staples
Allowing for the 90-day total investment horizon Philip Morris is expected to generate 6.55 times less return on investment than Consumer Staples. In addition to that, Philip Morris is 2.65 times more volatile than Consumer Staples Portfolio. It trades about 0.02 of its total potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.27 per unit of volatility. If you would invest 9,587 in Consumer Staples Portfolio on September 1, 2024 and sell it today you would earn a total of 374.00 from holding Consumer Staples Portfolio or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Philip Morris International vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Philip Morris Intern |
| Consumer Staples Por |
Philip Morris and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Consumer Staples
The main advantage of trading using opposite Philip Morris and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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