Correlation Between Pfizer and Tastemaker Acquisition

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

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

Diversification Opportunities for Pfizer and Tastemaker Acquisition

0.55

Correlation Coefficient

Pfizer  Tastemaker Acquisition

Very weak diversification

The 3 months correlation between Pfizer and Tastemaker is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Tastemaker Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tastemaker Acquisition 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 Tastemaker Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tastemaker Acquisition has no effect on the direction of Pfizer i.e., Pfizer and Tastemaker Acquisition go up and down completely randomly.

Pair Corralation between Pfizer and Tastemaker Acquisition

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Tastemaker Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 15.02 times less risky than Tastemaker Acquisition. The stock trades about -0.05 of its potential returns per unit of risk. The Tastemaker Acquisition Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Tastemaker Acquisition Corp on October 22, 2024 and sell it today you would lose (13.80) from holding Tastemaker Acquisition Corp or give up 69.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	19.96%
Values	Daily Returns

Pfizer Inc  vs.  Tastemaker Acquisition Corp

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 weak 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.

Tastemaker Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tastemaker Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tastemaker Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pfizer and Tastemaker Acquisition

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

The idea behind Pfizer Inc and Tastemaker Acquisition Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.