Correlation Between Pfizer and MCF Energy
Can any of the company-specific risk be diversified away by investing in both Pfizer and MCF Energy 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 MCF Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and MCF Energy, you can compare the effects of market volatilities on Pfizer and MCF Energy 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 MCF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and MCF Energy.
Diversification Opportunities for Pfizer and MCF Energy
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pfizer and MCF is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and MCF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCF Energy 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 MCF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCF Energy has no effect on the direction of Pfizer i.e., Pfizer and MCF Energy go up and down completely randomly.
Pair Corralation between Pfizer and MCF Energy
Considering the 90-day investment horizon Pfizer is expected to generate 4.29 times less return on investment than MCF Energy. But when comparing it to its historical volatility, Pfizer Inc is 5.7 times less risky than MCF Energy. It trades about 0.09 of its potential returns per unit of risk. MCF Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.79 in MCF Energy on December 4, 2024 and sell it today you would earn a total of 0.51 from holding MCF Energy or generate 13.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pfizer Inc vs. MCF Energy
Performance |
Timeline |
Pfizer Inc |
MCF Energy |
Pfizer and MCF Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pfizer and MCF Energy
The main advantage of trading using opposite Pfizer and MCF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, MCF Energy 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 MCF Energy will offset losses from the drop in MCF Energy's long position.Pfizer vs. Emergent Biosolutions | Pfizer vs. Bausch Health Companies | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries |
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Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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