Correlation Between Pfizer and Global Battery

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Can any of the company-specific risk be diversified away by investing in both Pfizer and Global Battery 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 Global Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Global Battery Metals, you can compare the effects of market volatilities on Pfizer and Global Battery 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 Global Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Global Battery.

Diversification Opportunities for Pfizer and Global Battery

PfizerGlobalDiversified AwayPfizerGlobalDiversified Away100%
-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Pfizer and Global is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Global Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Battery Metals 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 Global Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Battery Metals has no effect on the direction of Pfizer i.e., Pfizer and Global Battery go up and down completely randomly.

Pair Corralation between Pfizer and Global Battery

Considering the 90-day investment horizon Pfizer is expected to generate 11.08 times less return on investment than Global Battery. But when comparing it to its historical volatility, Pfizer Inc is 9.61 times less risky than Global Battery. It trades about 0.04 of its potential returns per unit of risk. Global Battery Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.85  in Global Battery Metals on November 22, 2024 and sell it today you would lose (0.25) from holding Global Battery Metals or give up 13.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.31%
ValuesDaily Returns

Pfizer Inc  vs.  Global Battery Metals

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020304050
JavaScript chart by amCharts 3.21.15PFE REZZF
       Timeline  
Pfizer Inc 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb24.52525.52626.527
Global Battery Metals 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Global Battery Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Global Battery reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.010.0150.020.0250.03

Pfizer and Global Battery Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.81-3.61-2.4-1.190.01.182.393.614.836.04 0.050.100.15
JavaScript chart by amCharts 3.21.15PFE REZZF
       Returns  

Pair Trading with Pfizer and Global Battery

The main advantage of trading using opposite Pfizer and Global Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Global Battery 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 Global Battery will offset losses from the drop in Global Battery's long position.
The idea behind Pfizer Inc and Global Battery Metals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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