Correlation Between Pfizer and Goodness Growth

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

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

Diversification Opportunities for Pfizer and Goodness Growth

0.66

Correlation Coefficient

Pfizer  Goodness Growth

Poor diversification

The 3 months correlation between Pfizer and Goodness is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Pfizer i.e., Pfizer and Goodness Growth go up and down completely randomly.

Pair Corralation between Pfizer and Goodness Growth

Considering the 90-day investment horizon Pfizer is expected to generate 3.49 times less return on investment than Goodness Growth. But when comparing it to its historical volatility, Pfizer Inc is 6.99 times less risky than Goodness Growth. It trades about 0.04 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Goodness Growth Holdings on December 4, 2024 and sell it today you would lose (1.00) from holding Goodness Growth Holdings or give up 2.33% of portfolio value over 90 days.

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

Pfizer Inc  vs.  Goodness Growth Holdings

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goodness Growth Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goodness Growth Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goodness Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Goodness Growth

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

The idea behind Pfizer Inc and Goodness Growth Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.