Correlation Between Catalyst Pharmaceuticals and PFIZER

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

By analyzing existing cross correlation between Catalyst Pharmaceuticals and PFIZER INC 4125, you can compare the effects of market volatilities on Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and PFIZER.

Diversification Opportunities for Catalyst Pharmaceuticals and PFIZER

-0.49

Correlation Coefficient

Catalyst Pharmaceuticals  PFIZER

Very good diversification

The 3 months correlation between Catalyst and PFIZER is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and PFIZER INC 4125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 4125 and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals 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 4125 has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and PFIZER go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and PFIZER

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to under-perform the PFIZER. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Pharmaceuticals is 2.09 times less risky than PFIZER. The stock trades about -0.04 of its potential returns per unit of risk. The PFIZER INC 4125 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,762  in PFIZER INC 4125 on October 6, 2024 and sell it today you would earn a total of  513.00  from holding PFIZER INC 4125 or generate 5.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Catalyst Pharmaceuticals  vs.  PFIZER INC 4125

Catalyst Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Catalyst Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PFIZER INC 4125

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PFIZER INC 4125 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PFIZER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Catalyst Pharmaceuticals and PFIZER

The main advantage of trading using opposite Catalyst Pharmaceuticals and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals and PFIZER INC 4125 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.