Correlation Between Pfizer and Intact Financial

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

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

Diversification Opportunities for Pfizer and Intact Financial

-0.45

Correlation Coefficient

Pfizer  Intact Financial

Very good diversification

The 3 months correlation between Pfizer and Intact is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of Pfizer i.e., Pfizer and Intact Financial go up and down completely randomly.

Pair Corralation between Pfizer and Intact Financial

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Intact Financial. In addition to that, Pfizer is 1.8 times more volatile than Intact Financial. It trades about -0.11 of its total potential returns per unit of risk. Intact Financial is currently generating about 0.04 per unit of volatility. If you would invest  19,143  in Intact Financial on September 3, 2024 and sell it today you would earn a total of  132.00  from holding Intact Financial or generate 0.69% return on investment over 90 days.

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

Pfizer Inc  vs.  Intact Financial

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 rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Intact Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pfizer and Intact Financial

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

The idea behind Pfizer Inc and Intact Financial 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.