Correlation Between Vector and Philip Morris
Can any of the company-specific risk be diversified away by investing in both Vector 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 Vector and Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vector Group and Philip Morris International, you can compare the effects of market volatilities on Vector 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 Vector with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vector and Philip Morris.
Diversification Opportunities for Vector and Philip Morris
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vector and Philip is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vector Group 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 Vector 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 Vector Group 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 Vector i.e., Vector and Philip Morris go up and down completely randomly.
Pair Corralation between Vector and Philip Morris
If you would invest 11,891 in Philip Morris International on August 8, 2024 and sell it today you would earn a total of 1,328 from holding Philip Morris International or generate 11.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 9.09% |
Values | Daily Returns |
Vector Group vs. Philip Morris International
Performance |
Timeline |
Vector Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Philip Morris Intern |
Vector and Philip Morris Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vector and Philip Morris
The main advantage of trading using opposite Vector and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vector 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.Vector vs. Universal | Vector vs. Imperial Brands PLC | Vector vs. Japan Tobacco ADR | Vector vs. Philip Morris International |
Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Japan Tobacco ADR | Philip Morris vs. British American Tobacco | Philip Morris vs. Imperial Brands PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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