Correlation Between Pfizer and Clearbridge Energy

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

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

Diversification Opportunities for Pfizer and Clearbridge Energy

-0.83

Correlation Coefficient

Pfizer  Clearbridge Energy

Pay attention - limited upside

The 3 months correlation between Pfizer and Clearbridge is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp 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 Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Pfizer i.e., Pfizer and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Pfizer and Clearbridge Energy

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Clearbridge Energy. In addition to that, Pfizer is 1.05 times more volatile than Clearbridge Energy Mlp. It trades about -0.08 of its total potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about 0.11 per unit of volatility. If you would invest  2,476  in Clearbridge Energy Mlp on August 31, 2024 and sell it today you would earn a total of  2,504  from holding Clearbridge Energy Mlp or generate 101.13% 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.  Clearbridge Energy Mlp

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 sluggish 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.

Clearbridge Energy Mlp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of very uncertain primary indicators, Clearbridge Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Clearbridge Energy

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

The idea behind Pfizer Inc and Clearbridge Energy Mlp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.