Correlation Between Boston Omaha and Philip Morris

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

By analyzing existing cross correlation between Boston Omaha and Philip Morris International, you can compare the effects of market volatilities on Boston Omaha and Philip Morris 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 Boston Omaha with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Omaha and Philip Morris.

Diversification Opportunities for Boston Omaha and Philip Morris

0.0

Correlation Coefficient

Boston Omaha  Philip Morris

Pay attention - limited upside

The 3 months correlation between Boston and Philip is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern and Boston Omaha 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 Boston Omaha are associated (or correlated) with Philip Morris. 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 Intern has no effect on the direction of Boston Omaha i.e., Boston Omaha and Philip Morris go up and down completely randomly.

Pair Corralation between Boston Omaha and Philip Morris

If you would invest (100.00) in Boston Omaha on January 19, 2024 and sell it today you would earn a total of  100.00  from holding Boston Omaha or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Boston Omaha  vs.  Philip Morris International

Boston Omaha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Omaha has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Boston Omaha is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Philip Morris Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Philip Morris International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Philip Morris is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Boston Omaha and Philip Morris

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

The idea behind Boston Omaha and Philip Morris International 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.