Correlation Between CROWN and Philip Morris

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

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

Diversification Opportunities for CROWN and Philip Morris

0.24

Correlation Coefficient

CROWN  Philip Morris

Modest diversification

The 3 months correlation between CROWN and Philip is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CROWN CASTLE INTERNATIONAL 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 CROWN 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 CROWN CASTLE INTERNATIONAL 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 CROWN i.e., CROWN and Philip Morris go up and down completely randomly.

Pair Corralation between CROWN and Philip Morris

Assuming the 90 days trading horizon CROWN CASTLE INTERNATIONAL is expected to generate 2.78 times more return on investment than Philip Morris. However, CROWN is 2.78 times more volatile than Philip Morris International. It trades about 0.23 of its potential returns per unit of risk. Philip Morris International is currently generating about 0.04 per unit of risk. If you would invest  6,523  in CROWN CASTLE INTERNATIONAL on October 23, 2024 and sell it today you would earn a total of  740.00  from holding CROWN CASTLE INTERNATIONAL or generate 11.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.95%
Values	Daily Returns

CROWN CASTLE INTERNATIONAL  vs.  Philip Morris International

CROWN CASTLE INTERNA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTERNATIONAL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CROWN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Philip Morris Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Philip Morris International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CROWN and Philip Morris

The main advantage of trading using opposite CROWN and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CROWN 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 CROWN CASTLE INTERNATIONAL 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.