Correlation Between Philip Morris and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Philip Morris and GEN Restaurant 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 GEN Restaurant 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 GEN Restaurant Group,, you can compare the effects of market volatilities on Philip Morris and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and GEN Restaurant.
Diversification Opportunities for Philip Morris and GEN Restaurant
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Philip and GEN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Philip Morris i.e., Philip Morris and GEN Restaurant go up and down completely randomly.
Pair Corralation between Philip Morris and GEN Restaurant
Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.74 times more return on investment than GEN Restaurant. However, Philip Morris International is 1.35 times less risky than GEN Restaurant. It trades about -0.03 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.22 per unit of risk. If you would invest 12,242 in Philip Morris International on October 22, 2024 and sell it today you would lose (83.00) from holding Philip Morris International or give up 0.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Philip Morris International vs. GEN Restaurant Group,
Performance |
Timeline |
Philip Morris Intern |
GEN Restaurant Group, |
Philip Morris and GEN Restaurant Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Philip Morris and GEN Restaurant
The main advantage of trading using opposite Philip Morris and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant's long position.Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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