Correlation Between Microsoft and PFIZER
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By analyzing existing cross correlation between Microsoft and PFIZER INC 44, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PFIZER.
Diversification Opportunities for Microsoft and PFIZER
Modest diversification
The 3 months correlation between Microsoft and PFIZER is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PFIZER INC 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 44 and Microsoft 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 Microsoft 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 44 has no effect on the direction of Microsoft i.e., Microsoft and PFIZER go up and down completely randomly.
Pair Corralation between Microsoft and PFIZER
Given the investment horizon of 90 days Microsoft is expected to generate 9.75 times less return on investment than PFIZER. But when comparing it to its historical volatility, Microsoft is 7.51 times less risky than PFIZER. It trades about 0.17 of its potential returns per unit of risk. PFIZER INC 44 is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 8,949 in PFIZER INC 44 on September 24, 2024 and sell it today you would earn a total of 3,970 from holding PFIZER INC 44 or generate 44.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Microsoft vs. PFIZER INC 44
Performance |
Timeline |
Microsoft |
PFIZER INC 44 |
Microsoft and PFIZER Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and PFIZER
The main advantage of trading using opposite Microsoft and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.Microsoft vs. BlackBerry | Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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