Correlation Between Pfizer and InflaRx NV

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

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

Diversification Opportunities for Pfizer and InflaRx NV

-0.56

Correlation Coefficient

Pfizer  InflaRx NV

Excellent diversification

The 3 months correlation between Pfizer and InflaRx is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and InflaRx NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InflaRx NV 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 InflaRx NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InflaRx NV has no effect on the direction of Pfizer i.e., Pfizer and InflaRx NV go up and down completely randomly.

Pair Corralation between Pfizer and InflaRx NV

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.21 times more return on investment than InflaRx NV. However, Pfizer Inc is 4.71 times less risky than InflaRx NV. It trades about -0.09 of its potential returns per unit of risk. InflaRx NV is currently generating about -0.08 per unit of risk. If you would invest  2,656  in Pfizer Inc on October 26, 2024 and sell it today you would lose (49.00) from holding Pfizer Inc or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Pfizer Inc  vs.  InflaRx NV

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 abnormal 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.

InflaRx NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in InflaRx NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, InflaRx NV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and InflaRx NV

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

The idea behind Pfizer Inc and InflaRx NV 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.