Correlation Between GM and PFIZER
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By analyzing existing cross correlation between General Motors and PFIZER INC 4125, you can compare the effects of market volatilities on GM 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 GM with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PFIZER.
Diversification Opportunities for GM and PFIZER
Very good diversification
The 3 months correlation between GM and PFIZER is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and PFIZER go up and down completely randomly.
Pair Corralation between GM and PFIZER
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.35 times more return on investment than PFIZER. However, GM is 1.35 times more volatile than PFIZER INC 4125. It trades about 0.09 of its potential returns per unit of risk. PFIZER INC 4125 is currently generating about -0.01 per unit of risk. If you would invest 3,555 in General Motors on September 24, 2024 and sell it today you would earn a total of 1,626 from holding General Motors or generate 45.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.38% |
Values | Daily Returns |
General Motors vs. PFIZER INC 4125
Performance |
Timeline |
General Motors |
PFIZER INC 4125 |
GM and PFIZER Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and PFIZER
The main advantage of trading using opposite GM and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.PFIZER vs. Western Union Co | PFIZER vs. Arrow Financial | PFIZER vs. Olympic Steel | PFIZER vs. Osaka Steel Co, |
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.
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