Correlation Between Philip Morris and Infosys
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Infosys 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 Infosys 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 Infosys Ltd ADR, you can compare the effects of market volatilities on Philip Morris and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Infosys.
Diversification Opportunities for Philip Morris and Infosys
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Philip and Infosys is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Philip Morris i.e., Philip Morris and Infosys go up and down completely randomly.
Pair Corralation between Philip Morris and Infosys
Allowing for the 90-day total investment horizon Philip Morris is expected to generate 1.09 times less return on investment than Infosys. But when comparing it to its historical volatility, Philip Morris International is 1.29 times less risky than Infosys. It trades about 0.06 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,702 in Infosys Ltd ADR on September 14, 2024 and sell it today you would earn a total of 623.00 from holding Infosys Ltd ADR or generate 36.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Philip Morris International vs. Infosys Ltd ADR
Performance |
| Timeline |
| Philip Morris Intern |
| Infosys Ltd ADR |
Philip Morris and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Infosys
The main advantage of trading using opposite Philip Morris and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| Philip Morris vs. British American Tobacco | Philip Morris vs. Universal | Philip Morris vs. Imperial Brands PLC | Philip Morris vs. Altria Group |
| Infosys vs. Cognizant Technology Solutions | Infosys vs. WNS Holdings | Infosys vs. CLARIVATE PLC | Infosys vs. Gartner |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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