Correlation Between Philip Morris and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Tenaris SA 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 Tenaris SA 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 Tenaris SA ADR, you can compare the effects of market volatilities on Philip Morris and Tenaris SA 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 Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Tenaris SA.
Diversification Opportunities for Philip Morris and Tenaris SA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Philip and Tenaris is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA ADR 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of Philip Morris i.e., Philip Morris and Tenaris SA go up and down completely randomly.
Pair Corralation between Philip Morris and Tenaris SA
Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.83 times more return on investment than Tenaris SA. However, Philip Morris International is 1.2 times less risky than Tenaris SA. It trades about 0.16 of its potential returns per unit of risk. Tenaris SA ADR is currently generating about 0.09 per unit of risk. If you would invest 10,051 in Philip Morris International on September 1, 2024 and sell it today you would earn a total of 3,255 from holding Philip Morris International or generate 32.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philip Morris International vs. Tenaris SA ADR
Performance |
| Timeline |
| Philip Morris Intern |
| Tenaris SA ADR |
Philip Morris and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Tenaris SA
The main advantage of trading using opposite Philip Morris and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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