Correlation Between Suburban Propane and Philip Morris
Can any of the company-specific risk be diversified away by investing in both Suburban Propane and Philip Morris 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 Suburban Propane and Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suburban Propane Partners and Philip Morris International, you can compare the effects of market volatilities on Suburban Propane and Philip Morris 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 Suburban Propane with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Philip Morris.
Diversification Opportunities for Suburban Propane and Philip Morris
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Suburban and Philip is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern and Suburban Propane 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 Suburban Propane Partners are associated (or correlated) with Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of Suburban Propane i.e., Suburban Propane and Philip Morris go up and down completely randomly.
Pair Corralation between Suburban Propane and Philip Morris
Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 1.5 times more return on investment than Philip Morris. However, Suburban Propane is 1.5 times more volatile than Philip Morris International. It trades about 0.05 of its potential returns per unit of risk. Philip Morris International is currently generating about 0.07 per unit of risk. If you would invest 1,391 in Suburban Propane Partners on September 3, 2024 and sell it today you would earn a total of 594.00 from holding Suburban Propane Partners or generate 42.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suburban Propane Partners vs. Philip Morris International
Performance |
| Timeline |
| Suburban Propane Partners |
| Philip Morris Intern |
Suburban Propane and Philip Morris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suburban Propane and Philip Morris
The main advantage of trading using opposite Suburban Propane and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane position performs unexpectedly, Philip Morris 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 Philip Morris will offset losses from the drop in Philip Morris' long position.| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. NewJersey Resources | Suburban Propane vs. Atmos Energy | Suburban Propane vs. Chesapeake Utilities |
| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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