Correlation Between Pfizer and Business Development

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

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

Diversification Opportunities for Pfizer and Business Development

-0.34

Correlation Coefficient

Pfizer  Business Development

Very good diversification

The 3 months correlation between Pfizer and Business is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Business Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business Development Corp 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 Business Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business Development Corp has no effect on the direction of Pfizer i.e., Pfizer and Business Development go up and down completely randomly.

Pair Corralation between Pfizer and Business Development

Considering the 90-day investment horizon Pfizer Inc is expected to generate 78.45 times more return on investment than Business Development. However, Pfizer is 78.45 times more volatile than Business Development Corp. It trades about 0.07 of its potential returns per unit of risk. Business Development Corp is currently generating about 0.22 per unit of risk. If you would invest  2,510  in Pfizer Inc on September 20, 2024 and sell it today you would earn a total of  63.00  from holding Pfizer Inc or generate 2.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Pfizer Inc  vs.  Business Development Corp

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Business Development Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Business Development Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Business Development is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pfizer and Business Development

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

The idea behind Pfizer Inc and Business Development Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.