Correlation Between Pfizer and ATCO

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

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

Diversification Opportunities for Pfizer and ATCO

-0.35

Correlation Coefficient

Pfizer  ATCO

Very good diversification

The 3 months correlation between Pfizer and ATCO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO 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 CDR are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of Pfizer i.e., Pfizer and ATCO go up and down completely randomly.

Pair Corralation between Pfizer and ATCO

Assuming the 90 days trading horizon Pfizer Inc CDR is expected to generate 0.7 times more return on investment than ATCO. However, Pfizer Inc CDR is 1.44 times less risky than ATCO. It trades about 0.1 of its potential returns per unit of risk. ATCO is currently generating about -0.03 per unit of risk. If you would invest  1,201  in Pfizer Inc CDR on September 28, 2024 and sell it today you would earn a total of  39.00  from holding Pfizer Inc CDR or generate 3.25% return on investment over 90 days.

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

Pfizer Inc CDR  vs.  ATCO

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 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.

ATCO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATCO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATCO is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pfizer and ATCO

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

The idea behind Pfizer Inc CDR and ATCO 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.