Correlation Between Pfizer and Global Acquisitions

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

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

Diversification Opportunities for Pfizer and Global Acquisitions

0.46

Correlation Coefficient

Pfizer  Global Acquisitions

Very weak diversification

The 3 months correlation between Pfizer and Global is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Global Acquisitions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Acquisitions 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 Global Acquisitions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Acquisitions has no effect on the direction of Pfizer i.e., Pfizer and Global Acquisitions go up and down completely randomly.

Pair Corralation between Pfizer and Global Acquisitions

Considering the 90-day investment horizon Pfizer is expected to generate 84.78 times less return on investment than Global Acquisitions. But when comparing it to its historical volatility, Pfizer Inc is 14.53 times less risky than Global Acquisitions. It trades about 0.02 of its potential returns per unit of risk. Global Acquisitions is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Global Acquisitions on December 2, 2024 and sell it today you would earn a total of  202.00  from holding Global Acquisitions or generate 448.89% return on investment over 90 days.

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

Pfizer Inc  vs.  Global Acquisitions

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Global Acquisitions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Acquisitions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Global Acquisitions reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Global Acquisitions

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

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