Correlation Between Pfizer and Change Finance

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

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

Diversification Opportunities for Pfizer and Change Finance

-0.48

Correlation Coefficient

Pfizer  Change Finance

Very good diversification

The 3 months correlation between Pfizer and Change is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Change Finance Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Change Finance Diver 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 Change Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Change Finance Diver has no effect on the direction of Pfizer i.e., Pfizer and Change Finance go up and down completely randomly.

Pair Corralation between Pfizer and Change Finance

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Change Finance. In addition to that, Pfizer is 1.74 times more volatile than Change Finance Diversified. It trades about -0.05 of its total potential returns per unit of risk. Change Finance Diversified is currently generating about 0.08 per unit of volatility. If you would invest  2,848  in Change Finance Diversified on October 26, 2024 and sell it today you would earn a total of  1,110  from holding Change Finance Diversified or generate 38.98% 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  vs.  Change Finance Diversified

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 abnormal 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.

Change Finance Diver

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Change Finance Diversified are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Change Finance is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and Change Finance

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

The idea behind Pfizer Inc and Change Finance Diversified 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.