Correlation Between Uber Technologies and Philip Morris

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

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

Diversification Opportunities for Uber Technologies and Philip Morris

-0.32

Correlation Coefficient

Uber Technologies  Philip Morris

Very good diversification

The 3 months correlation between Uber and Philip is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies 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 Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Philip Morris go up and down completely randomly.

Pair Corralation between Uber Technologies and Philip Morris

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the Philip Morris. In addition to that, Uber Technologies is 2.96 times more volatile than Philip Morris International. It trades about -0.19 of its total potential returns per unit of risk. Philip Morris International is currently generating about -0.19 per unit of volatility. If you would invest  12,954  in Philip Morris International on September 20, 2024 and sell it today you would lose (499.00) from holding Philip Morris International or give up 3.85% of portfolio value over 90 days.

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

Uber Technologies  vs.  Philip Morris International

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Philip Morris Intern

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Philip Morris is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Uber Technologies and Philip Morris

The main advantage of trading using opposite Uber Technologies and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.