Correlation Between Philip Morris and Global Net
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Philip Morris and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Global Net.
Diversification Opportunities for Philip Morris and Global Net
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Philip and Global is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Philip Morris i.e., Philip Morris and Global Net go up and down completely randomly.
Pair Corralation between Philip Morris and Global Net
Allowing for the 90-day total investment horizon Philip Morris International is expected to under-perform the Global Net. But the stock apears to be less risky and, when comparing its historical volatility, Philip Morris International is 1.83 times less risky than Global Net. The stock trades about -0.3 of its potential returns per unit of risk. The Global Net Lease is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,291 in Global Net Lease on October 13, 2024 and sell it today you would lose (44.00) from holding Global Net Lease or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Philip Morris International vs. Global Net Lease
Performance |
| Timeline |
| Philip Morris Intern |
| Global Net Lease |
Philip Morris and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Global Net
The main advantage of trading using opposite Philip Morris and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| Global Net vs. CleanGo Innovations | Global Net vs. Playstudios | Global Net vs. National Health Investors | Global Net vs. Futuretech II Acquisition |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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