Correlation Between Four Seasons and PFIZER

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

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

Diversification Opportunities for Four Seasons and PFIZER

0.29

Correlation Coefficient

Four Seasons  PFIZER

Modest diversification

The 3 months correlation between Four and PFIZER is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and PFIZER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC and Four Seasons 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 Four Seasons Education 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 Four Seasons i.e., Four Seasons and PFIZER go up and down completely randomly.

Pair Corralation between Four Seasons and PFIZER

Given the investment horizon of 90 days Four Seasons Education is expected to generate 100.48 times more return on investment than PFIZER. However, Four Seasons is 100.48 times more volatile than PFIZER INC. It trades about 0.05 of its potential returns per unit of risk. PFIZER INC is currently generating about -0.01 per unit of risk. If you would invest  769.00  in Four Seasons Education on September 26, 2024 and sell it today you would earn a total of  271.00  from holding Four Seasons Education or generate 35.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	82.66%
Values	Daily Returns

Four Seasons Education  vs.  PFIZER INC

Four Seasons Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Four Seasons and PFIZER

The main advantage of trading using opposite Four Seasons and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons 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 Four Seasons Education 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.