Correlation Between Philip Morris and Consumer Products
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Consumer Products 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 Products 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 Products Fund, you can compare the effects of market volatilities on Philip Morris and Consumer Products 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 Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Consumer Products.
Diversification Opportunities for Philip Morris and Consumer Products
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Philip and Consumer is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Philip Morris i.e., Philip Morris and Consumer Products go up and down completely randomly.
Pair Corralation between Philip Morris and Consumer Products
Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.9 times more return on investment than Consumer Products. However, Philip Morris International is 1.11 times less risky than Consumer Products. It trades about 0.07 of its potential returns per unit of risk. Consumer Products Fund is currently generating about 0.01 per unit of risk. If you would invest 9,190 in Philip Morris International on August 29, 2024 and sell it today you would earn a total of 4,038 from holding Philip Morris International or generate 43.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philip Morris International vs. Consumer Products Fund
Performance |
| Timeline |
| Philip Morris Intern |
| Consumer Products |
Philip Morris and Consumer Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Consumer Products
The main advantage of trading using opposite Philip Morris and Consumer Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Consumer Products 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 Products will offset losses from the drop in Consumer Products' long position.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| Consumer Products vs. Basic Materials Fund | Consumer Products vs. Nasdaq 100 Fund Class | Consumer Products vs. Health Care Fund | Consumer Products vs. Energy Fund Class |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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