Correlation Between Pfizer and Stantec
Can any of the company-specific risk be diversified away by investing in both Pfizer and Stantec 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 Stantec 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 Stantec, you can compare the effects of market volatilities on Pfizer and Stantec 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 Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Stantec.
Diversification Opportunities for Pfizer and Stantec
Pay attention - limited upside
The 3 months correlation between Pfizer and Stantec is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec 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 Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of Pfizer i.e., Pfizer and Stantec go up and down completely randomly.
Pair Corralation between Pfizer and Stantec
Assuming the 90 days trading horizon Pfizer Inc CDR is expected to under-perform the Stantec. In addition to that, Pfizer is 1.06 times more volatile than Stantec. It trades about -0.17 of its total potential returns per unit of risk. Stantec is currently generating about 0.12 per unit of volatility. If you would invest 10,752 in Stantec on September 14, 2024 and sell it today you would earn a total of 1,008 from holding Stantec or generate 9.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pfizer Inc CDR vs. Stantec
Performance |
Timeline |
Pfizer Inc CDR |
Stantec |
Pfizer and Stantec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pfizer and Stantec
The main advantage of trading using opposite Pfizer and Stantec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Stantec 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 Stantec will offset losses from the drop in Stantec's long position.Pfizer vs. Decibel Cannabis | ||
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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