Correlation Between Pfizer and Community Bankers

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

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

Diversification Opportunities for Pfizer and Community Bankers

-0.67

Correlation Coefficient

Pfizer  Community Bankers

Excellent diversification

The 3 months correlation between Pfizer and Community is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Community Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bankers 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 Community Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bankers has no effect on the direction of Pfizer i.e., Pfizer and Community Bankers go up and down completely randomly.

Pair Corralation between Pfizer and Community Bankers

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Community Bankers. In addition to that, Pfizer is 1.25 times more volatile than Community Bankers. It trades about -0.12 of its total potential returns per unit of risk. Community Bankers is currently generating about 0.28 per unit of volatility. If you would invest  412.00  in Community Bankers on September 12, 2024 and sell it today you would earn a total of  88.00  from holding Community Bankers or generate 21.36% return on investment over 90 days.

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

Pfizer Inc  vs.  Community Bankers

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 weak 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.

Community Bankers

Risk-Adjusted Performance

21 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Community Bankers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Community Bankers

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

The idea behind Pfizer Inc and Community Bankers 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 Commodity Directory module to find actively traded commodities issued by global exchanges.