Correlation Between Pfizer and Lever Global

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

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

Diversification Opportunities for Pfizer and Lever Global

-0.7

Correlation Coefficient

Pfizer  Lever Global

Excellent diversification

The 3 months correlation between Pfizer and Lever is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Lever Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lever Global 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 Lever Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lever Global has no effect on the direction of Pfizer i.e., Pfizer and Lever Global go up and down completely randomly.

Pair Corralation between Pfizer and Lever Global

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Lever Global. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 5.36 times less risky than Lever Global. The stock trades about -0.06 of its potential returns per unit of risk. The Lever Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Lever Global on October 4, 2024 and sell it today you would earn a total of  248.00  from holding Lever Global or generate 330.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.08%
Values	Daily Returns

Pfizer Inc  vs.  Lever Global

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lever Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lever Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Lever Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Lever Global

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

The idea behind Pfizer Inc and Lever Global 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.