Correlation Between Pfizer and Platinum Investment

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

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

Diversification Opportunities for Pfizer and Platinum Investment

0.53

Correlation Coefficient

Pfizer  Platinum Investment

Very weak diversification

The 3 months correlation between Pfizer and Platinum is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Pfizer i.e., Pfizer and Platinum Investment go up and down completely randomly.

Pair Corralation between Pfizer and Platinum Investment

Assuming the 90 days trading horizon Pfizer Inc is expected to under-perform the Platinum Investment. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 2.03 times less risky than Platinum Investment. The stock trades about -0.05 of its potential returns per unit of risk. The Platinum Investment Management is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Platinum Investment Management on October 5, 2024 and sell it today you would lose (23.00) from holding Platinum Investment Management or give up 36.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Pfizer Inc  vs.  Platinum Investment Management

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 comparatively stable technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Platinum Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pfizer and Platinum Investment

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

The idea behind Pfizer Inc and Platinum Investment Management 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.