Correlation Between Precious Metals and Pfizer

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

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

Diversification Opportunities for Precious Metals and Pfizer

0.37

Correlation Coefficient

Precious Metals  Pfizer

Weak diversification

The 3 months correlation between Precious and Pfizer is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And 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 Precious Metals 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 Precious Metals And 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 Precious Metals i.e., Precious Metals and Pfizer go up and down completely randomly.

Pair Corralation between Precious Metals and Pfizer

Assuming the 90 days trading horizon Precious Metals And is expected to under-perform the Pfizer. In addition to that, Precious Metals is 1.36 times more volatile than Pfizer Inc CDR. It trades about -0.05 of its total potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.02 per unit of volatility. If you would invest  1,257  in Pfizer Inc CDR on October 7, 2024 and sell it today you would lose (23.00) from holding Pfizer Inc CDR or give up 1.83% of portfolio value over 90 days.

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

Precious Metals And  vs.  Pfizer Inc CDR

Precious Metals And

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Precious Metals And are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pfizer Inc CDR

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Precious Metals and Pfizer

The main advantage of trading using opposite Precious Metals and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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 Precious Metals And 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.