Correlation Between Philip Morris and CROWN

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

Diversification Opportunities for Philip Morris and CROWN

0.13

Correlation Coefficient

Philip Morris  CROWN

Average diversification

The 3 months correlation between Philip and CROWN is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Philip Morris i.e., Philip Morris and CROWN go up and down completely randomly.

Pair Corralation between Philip Morris and CROWN

Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 2.45 times more return on investment than CROWN. However, Philip Morris is 2.45 times more volatile than CROWN CASTLE INTERNATIONAL. It trades about 0.03 of its potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about -0.12 per unit of risk. If you would invest  11,779  in Philip Morris International on October 4, 2024 and sell it today you would earn a total of  331.00  from holding Philip Morris International or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Philip Morris International  vs.  CROWN CASTLE INTERNATIONAL

Philip Morris Intern

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 2 (%) 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.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Philip Morris and CROWN

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

The idea behind Philip Morris International and CROWN CASTLE 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.