Correlation Between Pfizer and 43118DAA8

Can any of the company-specific risk be diversified away by investing in both Pfizer and 43118DAA8 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 43118DAA8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pfizer Inc and US43118DAA81, you can compare the effects of market volatilities on Pfizer and 43118DAA8 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 43118DAA8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and 43118DAA8.

Diversification Opportunities for Pfizer and 43118DAA8

-0.65

Correlation Coefficient

Pfizer  43118DAA8

Excellent diversification

The 3 months correlation between Pfizer and 43118DAA8 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and US43118DAA81 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US43118DAA81 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 43118DAA8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US43118DAA81 has no effect on the direction of Pfizer i.e., Pfizer and 43118DAA8 go up and down completely randomly.

Pair Corralation between Pfizer and 43118DAA8

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.4 times more return on investment than 43118DAA8. However, Pfizer Inc is 2.53 times less risky than 43118DAA8. It trades about 0.17 of its potential returns per unit of risk. US43118DAA81 is currently generating about -0.13 per unit of risk. If you would invest  2,557  in Pfizer Inc on October 11, 2024 and sell it today you would earn a total of  129.00  from holding Pfizer Inc or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	61.9%
Values	Daily Returns

Pfizer Inc  vs.  US43118DAA81

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

US43118DAA81

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US43118DAA81 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US43118DAA81 investors.

Pair Trading with Pfizer and 43118DAA8

The main advantage of trading using opposite Pfizer and 43118DAA8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, 43118DAA8 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 43118DAA8 will offset losses from the drop in 43118DAA8's long position.

The idea behind Pfizer Inc and US43118DAA81 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.