Correlation Between Pfizer and ALPS

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

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

Diversification Opportunities for Pfizer and ALPS

-0.76

Correlation Coefficient

Pfizer  ALPS

Pay attention - limited upside

The 3 months correlation between Pfizer and ALPS is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and ALPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS 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 ALPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS has no effect on the direction of Pfizer i.e., Pfizer and ALPS go up and down completely randomly.

Pair Corralation between Pfizer and ALPS

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the ALPS. In addition to that, Pfizer is 1.31 times more volatile than ALPS. It trades about -0.11 of its total potential returns per unit of risk. ALPS is currently generating about 0.23 per unit of volatility. If you would invest  2,440  in ALPS on September 21, 2024 and sell it today you would earn a total of  148.50  from holding ALPS or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	34.92%
Values	Daily Returns

Pfizer Inc  vs.  ALPS

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 uncertain 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.

ALPS

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days ALPS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, ALPS showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and ALPS

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

The idea behind Pfizer Inc and ALPS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.