Correlation Between Philip Morris and Altria

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Can any of the company-specific risk be diversified away by investing in both Philip Morris and Altria 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 Altria 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 Altria Group, you can compare the effects of market volatilities on Philip Morris and Altria 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 Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Altria.

Diversification Opportunities for Philip Morris and Altria

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Philip and Altria is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of Philip Morris i.e., Philip Morris and Altria go up and down completely randomly.

Pair Corralation between Philip Morris and Altria

Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.92 times more return on investment than Altria. However, Philip Morris International is 1.08 times less risky than Altria. It trades about 0.04 of its potential returns per unit of risk. Altria Group is currently generating about 0.03 per unit of risk. If you would invest  6,708  in Philip Morris International on July 1, 2022 and sell it today you would earn a total of  1,866  from holding Philip Morris International or generate 27.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Philip Morris International  vs.  Altria Group

 Performance (%) 
       Timeline  
Philip Morris Intern 
Philip Performance
0 of 100
Over the last 90 days Philip Morris International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's primary indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Philip Price Channel

Altria Group 
Altria Performance
0 of 100
Over the last 90 days Altria Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Altria is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Altria Price Channel

Philip Morris and Altria Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Philip Morris and Altria

The main advantage of trading using opposite Philip Morris and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Altria 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 Altria will offset losses from the drop in Altria's long position.
Philip Morris vs. Amazon Inc
The idea behind Philip Morris International and Altria Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Altria vs. Amazon Inc
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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