Correlation Between Philip Morris and Utz Brands

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

Diversification Opportunities for Philip Morris and Utz Brands

-0.5

Correlation Coefficient

Philip Morris  Utz Brands

Very good diversification

The 3 months correlation between Philip and Utz is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Utz Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utz Brands 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 Utz Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utz Brands has no effect on the direction of Philip Morris i.e., Philip Morris and Utz Brands go up and down completely randomly.

Pair Corralation between Philip Morris and Utz Brands

Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.96 times more return on investment than Utz Brands. However, Philip Morris International is 1.04 times less risky than Utz Brands. It trades about 0.23 of its potential returns per unit of risk. Utz Brands is currently generating about -0.1 per unit of risk. If you would invest  12,065  in Philip Morris International on December 26, 2024 and sell it today you would earn a total of  3,363  from holding Philip Morris International or generate 27.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Philip Morris International  vs.  Utz Brands

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.

Utz Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Utz Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Philip Morris and Utz Brands

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

The idea behind Philip Morris International and Utz Brands 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.