Correlation Between Pfizer and Fidelity New

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

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

Diversification Opportunities for Pfizer and Fidelity New

-0.65

Correlation Coefficient

Pfizer  Fidelity New

Excellent diversification

The 3 months correlation between Pfizer and Fidelity is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Fidelity New Millennium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Millennium 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 Fidelity New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Millennium has no effect on the direction of Pfizer i.e., Pfizer and Fidelity New go up and down completely randomly.

Pair Corralation between Pfizer and Fidelity New

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Fidelity New. In addition to that, Pfizer is 1.87 times more volatile than Fidelity New Millennium. It trades about -0.02 of its total potential returns per unit of risk. Fidelity New Millennium is currently generating about 0.12 per unit of volatility. If you would invest  3,438  in Fidelity New Millennium on September 15, 2024 and sell it today you would earn a total of  646.00  from holding Fidelity New Millennium or generate 18.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.17%
Values	Daily Returns

Pfizer Inc  vs.  Fidelity New Millennium

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Fidelity New Millennium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity New Millennium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Fidelity New is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pfizer and Fidelity New

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

The idea behind Pfizer Inc and Fidelity New Millennium 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.