Correlation Between Canaf Investments and Pfizer

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

By analyzing existing cross correlation between Canaf Investments and Pfizer Inc CDR, you can compare the effects of market volatilities on Canaf Investments and Pfizer 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 Canaf Investments with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaf Investments and Pfizer.

Diversification Opportunities for Canaf Investments and Pfizer

-0.11

Correlation Coefficient

Canaf Investments  Pfizer

Good diversification

The 3 months correlation between Canaf and Pfizer is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Canaf Investments and Pfizer Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc CDR and Canaf Investments 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 Canaf Investments are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc CDR has no effect on the direction of Canaf Investments i.e., Canaf Investments and Pfizer go up and down completely randomly.

Pair Corralation between Canaf Investments and Pfizer

Assuming the 90 days horizon Canaf Investments is expected to generate 3.29 times less return on investment than Pfizer. In addition to that, Canaf Investments is 2.03 times more volatile than Pfizer Inc CDR. It trades about 0.02 of its total potential returns per unit of risk. Pfizer Inc CDR is currently generating about 0.1 per unit of volatility. If you would invest  1,199  in Pfizer Inc CDR on September 27, 2024 and sell it today you would earn a total of  41.00  from holding Pfizer Inc CDR or generate 3.42% return on investment over 90 days.

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

Canaf Investments  vs.  Pfizer Inc CDR

Canaf Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Canaf Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pfizer Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Canaf Investments and Pfizer

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

The idea behind Canaf Investments and Pfizer Inc CDR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.