Correlation Between Pfizer and Intracellular

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

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

Diversification Opportunities for Pfizer and Intracellular

0.16

Correlation Coefficient

Pfizer  Intracellular

Average diversification

The 3 months correlation between Pfizer and Intracellular is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Intracellular Th in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intracellular Th 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 Intracellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intracellular Th has no effect on the direction of Pfizer i.e., Pfizer and Intracellular go up and down completely randomly.

Pair Corralation between Pfizer and Intracellular

Considering the 90-day investment horizon Pfizer is expected to generate 15.57 times less return on investment than Intracellular. But when comparing it to its historical volatility, Pfizer Inc is 3.62 times less risky than Intracellular. It trades about 0.04 of its potential returns per unit of risk. Intracellular Th is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  8,565  in Intracellular Th on November 28, 2024 and sell it today you would earn a total of  4,272  from holding Intracellular Th or generate 49.88% return on investment over 90 days.

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

Pfizer Inc  vs.  Intracellular Th

Pfizer Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Intracellular Th

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intracellular Th are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Intracellular demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Intracellular

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

The idea behind Pfizer Inc and Intracellular Th 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.