Correlation Between Bon Natural and Philip Morris

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

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

Diversification Opportunities for Bon Natural and Philip Morris

-0.77

Correlation Coefficient

Bon Natural  Philip Morris

Pay attention - limited upside

The 3 months correlation between Bon and Philip is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life 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 Bon Natural 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 Bon Natural Life 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 Bon Natural i.e., Bon Natural and Philip Morris go up and down completely randomly.

Pair Corralation between Bon Natural and Philip Morris

Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Philip Morris. In addition to that, Bon Natural is 9.32 times more volatile than Philip Morris International. It trades about -0.15 of its total potential returns per unit of risk. Philip Morris International is currently generating about 0.23 per unit of volatility. If you would invest  12,039  in Philip Morris International on December 27, 2024 and sell it today you would earn a total of  3,394  from holding Philip Morris International or generate 28.19% return on investment over 90 days.

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

Bon Natural Life  vs.  Philip Morris International

Bon Natural Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 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.

Pair Trading with Bon Natural and Philip Morris

The main advantage of trading using opposite Bon Natural and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural 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 Bon Natural Life 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.