Correlation Between Vital Farms and Philip Morris

Can any of the company-specific risk be diversified away by investing in both Vital Farms 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 Vital Farms and Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vital Farms and Philip Morris International, you can compare the effects of market volatilities on Vital Farms 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 Vital Farms with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Farms and Philip Morris.

Diversification Opportunities for Vital Farms and Philip Morris

-0.85

Correlation Coefficient

Vital Farms  Philip Morris

Pay attention - limited upside

The 3 months correlation between Vital and Philip is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms 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 Vital Farms 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 Vital Farms 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 Vital Farms i.e., Vital Farms and Philip Morris go up and down completely randomly.

Pair Corralation between Vital Farms and Philip Morris

Given the investment horizon of 90 days Vital Farms is expected to under-perform the Philip Morris. In addition to that, Vital Farms is 2.07 times more volatile than Philip Morris International. It trades about -0.07 of its total potential returns per unit of risk. Philip Morris International is currently generating about 0.25 per unit of volatility. If you would invest  11,896  in Philip Morris International on December 28, 2024 and sell it today you would earn a total of  3,605  from holding Philip Morris International or generate 30.3% return on investment over 90 days.

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

Vital Farms  vs.  Philip Morris International

Vital Farms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Farms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 19 (%) 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.

Pair Trading with Vital Farms and Philip Morris

The main advantage of trading using opposite Vital Farms and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Farms 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.

The idea behind Vital Farms and Philip Morris International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.