Correlation Between Pfizer and Senvest Capital

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

Diversification Opportunities for Pfizer and Senvest Capital

-0.56

Correlation Coefficient

Pfizer  Senvest Capital

Excellent diversification

The 3 months correlation between Pfizer and Senvest is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and Senvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senvest Capital 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 Senvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senvest Capital has no effect on the direction of Pfizer i.e., Pfizer and Senvest Capital go up and down completely randomly.

Pair Corralation between Pfizer and Senvest Capital

Assuming the 90 days trading horizon Pfizer is expected to generate 1.23 times less return on investment than Senvest Capital. In addition to that, Pfizer is 2.62 times more volatile than Senvest Capital. It trades about 0.13 of its total potential returns per unit of risk. Senvest Capital is currently generating about 0.42 per unit of volatility. If you would invest  33,000  in Senvest Capital on September 22, 2024 and sell it today you would earn a total of  2,000  from holding Senvest Capital or generate 6.06% 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.  Senvest Capital

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 unfluctuating 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.

Senvest Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Senvest Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pfizer and Senvest Capital

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

The idea behind Pfizer Inc CDR and Senvest Capital 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.