Correlation Between Philip Morris and General Mills
Can any of the company-specific risk be diversified away by investing in both Philip Morris and General Mills 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 General Mills 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 General Mills, you can compare the effects of market volatilities on Philip Morris and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and General Mills.
Diversification Opportunities for Philip Morris and General Mills
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Philip and General is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Philip Morris i.e., Philip Morris and General Mills go up and down completely randomly.
Pair Corralation between Philip Morris and General Mills
Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 1.29 times more return on investment than General Mills. However, Philip Morris is 1.29 times more volatile than General Mills. It trades about 0.0 of its potential returns per unit of risk. General Mills is currently generating about -0.1 per unit of risk. If you would invest 13,211 in Philip Morris International on August 31, 2024 and sell it today you would lose (29.00) from holding Philip Morris International or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philip Morris International vs. General Mills
Performance |
| Timeline |
| Philip Morris Intern |
| General Mills |
Philip Morris and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and General Mills
The main advantage of trading using opposite Philip Morris and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel Foods |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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