Correlation Between Enanta Pharmaceuticals and Pfizer

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

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

Diversification Opportunities for Enanta Pharmaceuticals and Pfizer

0.7

Correlation Coefficient

Enanta Pharmaceuticals  Pfizer

Poor diversification

The 3 months correlation between Enanta and Pfizer is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Enanta Pharmaceuticals and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Enanta 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 Enanta 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 has no effect on the direction of Enanta Pharmaceuticals i.e., Enanta Pharmaceuticals and Pfizer go up and down completely randomly.

Pair Corralation between Enanta Pharmaceuticals and Pfizer

Given the investment horizon of 90 days Enanta Pharmaceuticals is expected to under-perform the Pfizer. In addition to that, Enanta Pharmaceuticals is 1.88 times more volatile than Pfizer Inc. It trades about -0.21 of its total potential returns per unit of risk. Pfizer Inc is currently generating about -0.06 per unit of volatility. If you would invest  2,787  in Pfizer Inc on September 3, 2024 and sell it today you would lose (166.00) from holding Pfizer Inc or give up 5.96% of portfolio value over 90 days.

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

Enanta Pharmaceuticals  vs.  Pfizer Inc

Enanta Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enanta Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enanta Pharmaceuticals and Pfizer

The main advantage of trading using opposite Enanta Pharmaceuticals and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enanta 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 Enanta Pharmaceuticals and Pfizer Inc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.