Correlation Between Philip Morris and Humble Fume
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Humble Fume 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 Humble Fume 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 Humble Fume, you can compare the effects of market volatilities on Philip Morris and Humble Fume 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 Humble Fume. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Humble Fume.
Diversification Opportunities for Philip Morris and Humble Fume
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Philip and Humble is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Humble Fume in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humble Fume 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 Humble Fume. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humble Fume has no effect on the direction of Philip Morris i.e., Philip Morris and Humble Fume go up and down completely randomly.
Pair Corralation between Philip Morris and Humble Fume
If you would invest 13,050 in Philip Morris International on August 28, 2024 and sell it today you would earn a total of 178.00 from holding Philip Morris International or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Philip Morris International vs. Humble Fume
Performance |
| Timeline |
| Philip Morris Intern |
| Humble Fume |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Philip Morris and Humble Fume Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Humble Fume
The main advantage of trading using opposite Philip Morris and Humble Fume positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Humble Fume 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 Humble Fume will offset losses from the drop in Humble Fume's long position.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| Humble Fume vs. PT Hanjaya Mandala | Humble Fume vs. Greenlane Holdings | Humble Fume vs. Pyxus International | Humble Fume vs. 22nd Century 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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