Correlation Between Pfizer and DHAC Old

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

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

Diversification Opportunities for Pfizer and DHAC Old

-0.09

Correlation Coefficient

Pfizer  DHAC Old

Good diversification

The 3 months correlation between Pfizer and DHAC is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and DHAC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHAC Old 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 DHAC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHAC Old has no effect on the direction of Pfizer i.e., Pfizer and DHAC Old go up and down completely randomly.

Pair Corralation between Pfizer and DHAC Old

If you would invest  2,513  in Pfizer Inc on October 22, 2024 and sell it today you would earn a total of  117.00  from holding Pfizer Inc or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.5%
Values	Daily Returns

Pfizer Inc  vs.  DHAC Old

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.

DHAC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DHAC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, DHAC Old 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 DHAC Old

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

The idea behind Pfizer Inc and DHAC Old 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.