Correlation Between Pfizer and Disney

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

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

Diversification Opportunities for Pfizer and Disney

-0.86

Correlation Coefficient

Pfizer  Disney

Pay attention - limited upside

The 3 months correlation between Pfizer and Disney is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Pfizer i.e., Pfizer and Disney go up and down completely randomly.

Pair Corralation between Pfizer and Disney

Considering the 90-day investment horizon Pfizer is expected to generate 5.81 times less return on investment than Disney. But when comparing it to its historical volatility, Pfizer Inc is 1.1 times less risky than Disney. It trades about 0.01 of its potential returns per unit of risk. Walt Disney is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,450  in Walt Disney on October 22, 2024 and sell it today you would earn a total of  1,252  from holding Walt Disney or generate 13.25% return on investment over 90 days.

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

Pfizer Inc  vs.  Walt Disney

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.

Walt Disney

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pfizer and Disney

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

The idea behind Pfizer Inc and Walt Disney 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.