Correlation Between Philip Morris and Green Planet

Can any of the company-specific risk be diversified away by investing in both Philip Morris and Green Planet 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 Green Planet 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 Green Planet Bio, you can compare the effects of market volatilities on Philip Morris and Green Planet 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 Green Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Green Planet.

Diversification Opportunities for Philip Morris and Green Planet

0.23

Correlation Coefficient

Philip Morris  Green Planet

Modest diversification

The 3 months correlation between Philip and Green is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Green Planet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Planet Bio 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 Green Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Planet Bio has no effect on the direction of Philip Morris i.e., Philip Morris and Green Planet go up and down completely randomly.

Pair Corralation between Philip Morris and Green Planet

If you would invest  54.00  in Green Planet Bio on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Green Planet Bio or generate 0.0% return on investment over 90 days.

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

Philip Morris International  vs.  Green Planet Bio

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 recent stock price disarray, may contribute to short-term losses for the investors.

Green Planet Bio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Green Planet Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Green Planet sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philip Morris and Green Planet

The main advantage of trading using opposite Philip Morris and Green Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Green Planet 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 Green Planet will offset losses from the drop in Green Planet's long position.

The idea behind Philip Morris International and Green Planet Bio 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.