Correlation Between Philip Morris and Stryve Foods

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

Diversification Opportunities for Philip Morris and Stryve Foods

0.61

Correlation Coefficient

Philip Morris  Stryve Foods

Poor diversification

The 3 months correlation between Philip and Stryve is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Stryve Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryve Foods 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 Stryve Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryve Foods has no effect on the direction of Philip Morris i.e., Philip Morris and Stryve Foods go up and down completely randomly.

Pair Corralation between Philip Morris and Stryve Foods

Allowing for the 90-day total investment horizon Philip Morris is expected to generate 1.12 times less return on investment than Stryve Foods. But when comparing it to its historical volatility, Philip Morris International is 5.07 times less risky than Stryve Foods. It trades about 0.23 of its potential returns per unit of risk. Stryve Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Stryve Foods on December 19, 2024 and sell it today you would earn a total of  1.00  from holding Stryve Foods or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	59.32%
Values	Daily Returns

Philip Morris International  vs.  Stryve Foods

Philip Morris Intern

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Philip Morris displayed solid returns over the last few months and may actually be approaching a breakup point.

Stryve Foods

Risk-Adjusted Performance

Insignificant

Over the last 90 days Stryve Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Stryve Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philip Morris and Stryve Foods

The main advantage of trading using opposite Philip Morris and Stryve Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Stryve Foods 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 Stryve Foods will offset losses from the drop in Stryve Foods' long position.

The idea behind Philip Morris International and Stryve Foods 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.