Correlation Between Pfizer and Grupo Sports

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

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

Diversification Opportunities for Pfizer and Grupo Sports

-0.59

Correlation Coefficient

Pfizer  Grupo Sports

Excellent diversification

The 3 months correlation between Pfizer and Grupo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World and Pfizer 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 Pfizer Inc are associated (or correlated) with Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of Pfizer i.e., Pfizer and Grupo Sports go up and down completely randomly.

Pair Corralation between Pfizer and Grupo Sports

Assuming the 90 days trading horizon Pfizer Inc is expected to generate 6.67 times more return on investment than Grupo Sports. However, Pfizer is 6.67 times more volatile than Grupo Sports World. It trades about 0.14 of its potential returns per unit of risk. Grupo Sports World is currently generating about -0.32 per unit of risk. If you would invest  52,701  in Pfizer Inc on October 9, 2024 and sell it today you would earn a total of  2,000  from holding Pfizer Inc or generate 3.79% return on investment over 90 days.

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

Pfizer Inc  vs.  Grupo Sports World

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. In spite of fairly strong technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grupo Sports World

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Sports World are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Grupo Sports

The main advantage of trading using opposite Pfizer and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Grupo Sports 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 Grupo Sports will offset losses from the drop in Grupo Sports' long position.

The idea behind Pfizer Inc and Grupo Sports World 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.