Correlation Between PetMed Express and PHILIP

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

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

Diversification Opportunities for PetMed Express and PHILIP

-0.54

Correlation Coefficient

PetMed Express  PHILIP

Excellent diversification

The 3 months correlation between PetMed and PHILIP is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PetMed Express 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 PetMed Express 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 PetMed Express 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 PetMed Express i.e., PetMed Express and PHILIP go up and down completely randomly.

Pair Corralation between PetMed Express and PHILIP

Given the investment horizon of 90 days PetMed Express is expected to generate 7.41 times more return on investment than PHILIP. However, PetMed Express is 7.41 times more volatile than PHILIP MORRIS INTL. It trades about 0.12 of its potential returns per unit of risk. PHILIP MORRIS INTL is currently generating about -0.06 per unit of risk. If you would invest  349.00  in PetMed Express on September 23, 2024 and sell it today you would earn a total of  148.00  from holding PetMed Express or generate 42.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

PetMed Express  vs.  PHILIP MORRIS INTL

PetMed Express

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PetMed Express are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, PetMed Express unveiled 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 somewhat strong basic indicators, PHILIP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PetMed Express and PHILIP

The main advantage of trading using opposite PetMed Express and PHILIP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetMed Express 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 PetMed Express 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.