Correlation Between Philip Morris and 22nd Century
Can any of the company-specific risk be diversified away by investing in both Philip Morris and 22nd Century 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 22nd Century 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 22nd Century Group, you can compare the effects of market volatilities on Philip Morris and 22nd Century 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 22nd Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and 22nd Century.
Diversification Opportunities for Philip Morris and 22nd Century
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Philip and 22nd is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and 22nd Century Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 22nd Century Group 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 22nd Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 22nd Century Group has no effect on the direction of Philip Morris i.e., Philip Morris and 22nd Century go up and down completely randomly.
Pair Corralation between Philip Morris and 22nd Century
Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.11 times more return on investment than 22nd Century. However, Philip Morris International is 9.48 times less risky than 22nd Century. It trades about 0.13 of its potential returns per unit of risk. 22nd Century Group is currently generating about -0.08 per unit of risk. If you would invest 8,941 in Philip Morris International on August 24, 2024 and sell it today you would earn a total of 4,149 from holding Philip Morris International or generate 46.4% 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. 22nd Century Group
Performance |
| Timeline |
| Philip Morris Intern |
| 22nd Century Group |
Philip Morris and 22nd Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and 22nd Century
The main advantage of trading using opposite Philip Morris and 22nd Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, 22nd Century 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 22nd Century will offset losses from the drop in 22nd Century's long position.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| 22nd Century vs. Turning Point Brands | 22nd Century vs. Green Globe International | 22nd Century vs. Imperial Brands PLC | 22nd Century vs. Kaival Brands Innovations |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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