Correlation Between LQwD FinTech and Pfizer

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

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

Diversification Opportunities for LQwD FinTech and Pfizer

0.31

Correlation Coefficient

LQwD FinTech  Pfizer

Weak diversification

The 3 months correlation between LQwD and Pfizer is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp 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 LQwD FinTech 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 LQwD FinTech Corp 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 LQwD FinTech i.e., LQwD FinTech and Pfizer go up and down completely randomly.

Pair Corralation between LQwD FinTech and Pfizer

Assuming the 90 days trading horizon LQwD FinTech Corp is expected to under-perform the Pfizer. In addition to that, LQwD FinTech is 7.17 times more volatile than Pfizer Inc CDR. It trades about -0.09 of its total potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.04 per unit of volatility. If you would invest  1,208  in Pfizer Inc CDR on December 29, 2024 and sell it today you would lose (44.00) from holding Pfizer Inc CDR or give up 3.64% of portfolio value over 90 days.

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

LQwD FinTech Corp  vs.  Pfizer Inc CDR

LQwD FinTech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days LQwD FinTech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pfizer Inc CDR

Risk-Adjusted Performance

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 very healthy basic indicators, Pfizer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LQwD FinTech and Pfizer

The main advantage of trading using opposite LQwD FinTech and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LQwD FinTech 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 LQwD FinTech Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.