Correlation Between Philip Morris and Nokia Oyj
Can any of the company-specific risk be diversified away by investing in both Philip Morris and Nokia Oyj 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 Nokia Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philip Morris CR and Nokia Oyj, you can compare the effects of market volatilities on Philip Morris and Nokia Oyj 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 Nokia Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and Nokia Oyj.
Diversification Opportunities for Philip Morris and Nokia Oyj
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Philip and Nokia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris CR and Nokia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia Oyj 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 CR are associated (or correlated) with Nokia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia Oyj has no effect on the direction of Philip Morris i.e., Philip Morris and Nokia Oyj go up and down completely randomly.
Pair Corralation between Philip Morris and Nokia Oyj
Assuming the 90 days trading horizon Philip Morris is expected to generate 2.32 times less return on investment than Nokia Oyj. But when comparing it to its historical volatility, Philip Morris CR is 2.69 times less risky than Nokia Oyj. It trades about 0.06 of its potential returns per unit of risk. Nokia Oyj is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,321 in Nokia Oyj on August 28, 2024 and sell it today you would earn a total of 1,640 from holding Nokia Oyj or generate 19.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.52% |
| Values | Daily Returns |
Philip Morris CR vs. Nokia Oyj
Performance |
| Timeline |
| Philip Morris CR |
| Nokia Oyj |
Philip Morris and Nokia Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and Nokia Oyj
The main advantage of trading using opposite Philip Morris and Nokia Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Nokia Oyj 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 Nokia Oyj will offset losses from the drop in Nokia Oyj's long position.| Philip Morris vs. Cez AS | Philip Morris vs. HARDWARIO as | Philip Morris vs. Prabos Plus as | Philip Morris vs. Kofola CeskoSlovensko as |
| Nokia Oyj vs. Raiffeisen Bank International | Nokia Oyj vs. JT ARCH INVESTMENTS | Nokia Oyj vs. Moneta Money Bank | Nokia Oyj vs. UNIQA Insurance Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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