Correlation Between Bill and PHILIP

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

By analyzing existing cross correlation between Bill Com Holdings and PHILIP MORRIS INTL, you can compare the effects of market volatilities on Bill and PHILIP 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 Bill with a short position of PHILIP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bill and PHILIP.

Diversification Opportunities for Bill and PHILIP

-0.37

Correlation Coefficient

Bill  PHILIP

Very good diversification

The 3 months correlation between Bill and PHILIP is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and PHILIP MORRIS INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILIP MORRIS INTL and Bill 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 Bill Com Holdings are associated (or correlated) with PHILIP. 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 INTL has no effect on the direction of Bill i.e., Bill and PHILIP go up and down completely randomly.

Pair Corralation between Bill and PHILIP

Given the investment horizon of 90 days Bill Com Holdings is expected to generate 3.57 times more return on investment than PHILIP. However, Bill is 3.57 times more volatile than PHILIP MORRIS INTL. It trades about 0.26 of its potential returns per unit of risk. PHILIP MORRIS INTL is currently generating about -0.2 per unit of risk. If you would invest  5,217  in Bill Com Holdings on September 25, 2024 and sell it today you would earn a total of  3,728  from holding Bill Com Holdings or generate 71.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bill Com Holdings  vs.  PHILIP MORRIS INTL

Bill Com Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

PHILIP MORRIS INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHILIP MORRIS INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PHILIP MORRIS INTL investors.

Pair Trading with Bill and PHILIP

The main advantage of trading using opposite Bill and PHILIP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bill position performs unexpectedly, PHILIP 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 will offset losses from the drop in PHILIP's long position.

The idea behind Bill Com Holdings and PHILIP MORRIS INTL 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.