Correlation Between Visa and Philip Morris
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Philip Morris International, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Philip Morris.
Diversification Opportunities for Visa and Philip Morris
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Philip is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Philip Morris go up and down completely randomly.
Pair Corralation between Visa and Philip Morris
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.78 times more return on investment than Philip Morris. However, Visa Class A is 1.28 times less risky than Philip Morris. It trades about 0.29 of its potential returns per unit of risk. Philip Morris International is currently generating about 0.0 per unit of risk. If you would invest 28,322 in Visa Class A on August 24, 2024 and sell it today you would earn a total of 2,417 from holding Visa Class A or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Visa Class A vs. Philip Morris International
Performance |
| Timeline |
| Visa Class A |
| Philip Morris Intern |
Visa and Philip Morris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Philip Morris
The main advantage of trading using opposite Visa and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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