Correlation Between Dole PLC and Philip Morris

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

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

Diversification Opportunities for Dole PLC and Philip Morris

0.11

Correlation Coefficient

Dole PLC  Philip Morris

Average diversification

The 3 months correlation between Dole and Philip is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC 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 Dole PLC 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 Dole PLC 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 Dole PLC i.e., Dole PLC and Philip Morris go up and down completely randomly.

Pair Corralation between Dole PLC and Philip Morris

Given the investment horizon of 90 days Dole PLC is expected to generate 2.28 times less return on investment than Philip Morris. In addition to that, Dole PLC is 1.25 times more volatile than Philip Morris International. It trades about 0.03 of its total potential returns per unit of risk. Philip Morris International is currently generating about 0.09 per unit of volatility. If you would invest  8,776  in Philip Morris International on November 19, 2024 and sell it today you would earn a total of  6,270  from holding Philip Morris International or generate 71.44% return on investment over 90 days.

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

Dole PLC  vs.  Philip Morris International

Dole PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Philip Morris Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 12 (%) 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 Dole PLC and Philip Morris

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

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.