Correlation Between Pfizer and Jpmorgan High

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

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

Diversification Opportunities for Pfizer and Jpmorgan High

0.12

Correlation Coefficient

Pfizer  Jpmorgan High

Average diversification

The 3 months correlation between Pfizer and Jpmorgan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Jpmorgan High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan High Yield 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 Jpmorgan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan High Yield has no effect on the direction of Pfizer i.e., Pfizer and Jpmorgan High go up and down completely randomly.

Pair Corralation between Pfizer and Jpmorgan High

Considering the 90-day investment horizon Pfizer Inc is expected to generate 8.42 times more return on investment than Jpmorgan High. However, Pfizer is 8.42 times more volatile than Jpmorgan High Yield. It trades about 0.04 of its potential returns per unit of risk. Jpmorgan High Yield is currently generating about 0.08 per unit of risk. If you would invest  2,540  in Pfizer Inc on December 1, 2024 and sell it today you would earn a total of  70.00  from holding Pfizer Inc or generate 2.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Pfizer Inc  vs.  Jpmorgan High Yield

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 3 (%) 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.

Jpmorgan High Yield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan High Yield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and Jpmorgan High

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

The idea behind Pfizer Inc and Jpmorgan High Yield 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.