Correlation Between Pfizer and Lassonde Industries

Can any of the company-specific risk be diversified away by investing in both Pfizer and Lassonde Industries 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 Lassonde Industries 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 Lassonde Industries, you can compare the effects of market volatilities on Pfizer and Lassonde Industries 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 Lassonde Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Lassonde Industries.

Diversification Opportunities for Pfizer and Lassonde Industries

-0.42

Correlation Coefficient

Pfizer  Lassonde Industries

Very good diversification

The 3 months correlation between Pfizer and Lassonde is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and Lassonde Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lassonde Industries 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 Lassonde Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lassonde Industries has no effect on the direction of Pfizer i.e., Pfizer and Lassonde Industries go up and down completely randomly.

Pair Corralation between Pfizer and Lassonde Industries

Assuming the 90 days trading horizon Pfizer Inc CDR is expected to under-perform the Lassonde Industries. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc CDR is 1.26 times less risky than Lassonde Industries. The stock trades about -0.06 of its potential returns per unit of risk. The Lassonde Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,683  in Lassonde Industries on October 4, 2024 and sell it today you would earn a total of  7,800  from holding Lassonde Industries or generate 73.01% 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 CDR  vs.  Lassonde Industries

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.

Lassonde Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lassonde Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lassonde Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pfizer and Lassonde Industries

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

The idea behind Pfizer Inc CDR and Lassonde Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..