Correlation Between Pfizer and 437076BW1

Can any of the company-specific risk be diversified away by investing in both Pfizer and 437076BW1 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 437076BW1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pfizer Inc and HOME DEPOT INC, you can compare the effects of market volatilities on Pfizer and 437076BW1 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 437076BW1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and 437076BW1.

Diversification Opportunities for Pfizer and 437076BW1

-0.24

Correlation Coefficient

Pfizer  437076BW1

Very good diversification

The 3 months correlation between Pfizer and 437076BW1 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and HOME DEPOT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT INC 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 437076BW1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT INC has no effect on the direction of Pfizer i.e., Pfizer and 437076BW1 go up and down completely randomly.

Pair Corralation between Pfizer and 437076BW1

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the 437076BW1. In addition to that, Pfizer is 3.82 times more volatile than HOME DEPOT INC. It trades about -0.03 of its total potential returns per unit of risk. HOME DEPOT INC is currently generating about 0.0 per unit of volatility. If you would invest  9,717  in HOME DEPOT INC on December 2, 2024 and sell it today you would earn a total of  22.00  from holding HOME DEPOT INC or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Pfizer Inc  vs.  HOME DEPOT INC

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 4 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

HOME DEPOT INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days HOME DEPOT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 437076BW1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and 437076BW1

The main advantage of trading using opposite Pfizer and 437076BW1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, 437076BW1 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 437076BW1 will offset losses from the drop in 437076BW1's long position.

The idea behind Pfizer Inc and HOME DEPOT INC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.