Correlation Between PHILIP and Dow Jones
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By analyzing existing cross correlation between PHILIP MORRIS INTERNATIONAL and Dow Jones Industrial, you can compare the effects of market volatilities on PHILIP and Dow Jones 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 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHILIP and Dow Jones.
Diversification Opportunities for PHILIP and Dow Jones
Very good diversification
The 3 months correlation between PHILIP and Dow is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PHILIP MORRIS INTERNATIONAL and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and PHILIP 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of PHILIP i.e., PHILIP and Dow Jones go up and down completely randomly.
Pair Corralation between PHILIP and Dow Jones
Assuming the 90 days trading horizon PHILIP is expected to generate 3.77 times less return on investment than Dow Jones. But when comparing it to its historical volatility, PHILIP MORRIS INTERNATIONAL is 1.38 times less risky than Dow Jones. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.99% |
| Values | Daily Returns |
PHILIP MORRIS INTERNATIONAL vs. Dow Jones Industrial
Performance |
| Timeline |
PHILIP and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PHILIP MORRIS INTERNATIONAL
Pair trading matchups for PHILIP
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PHILIP and Dow Jones
The main advantage of trading using opposite PHILIP and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHILIP position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.The idea behind PHILIP MORRIS INTERNATIONAL and Dow Jones Industrial 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.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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