Correlation Between Pfizer and 456837AW3

Can any of the company-specific risk be diversified away by investing in both Pfizer and 456837AW3 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 456837AW3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pfizer Inc and ING GROEP NV, you can compare the effects of market volatilities on Pfizer and 456837AW3 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 456837AW3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and 456837AW3.

Diversification Opportunities for Pfizer and 456837AW3

0.76

Correlation Coefficient

Pfizer  456837AW3

Poor diversification

The 3 months correlation between Pfizer and 456837AW3 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and ING GROEP NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING GROEP NV 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 456837AW3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING GROEP NV has no effect on the direction of Pfizer i.e., Pfizer and 456837AW3 go up and down completely randomly.

Pair Corralation between Pfizer and 456837AW3

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the 456837AW3. In addition to that, Pfizer is 4.35 times more volatile than ING GROEP NV. It trades about -0.1 of its total potential returns per unit of risk. ING GROEP NV is currently generating about -0.16 per unit of volatility. If you would invest  8,927  in ING GROEP NV on September 19, 2024 and sell it today you would lose (266.00) from holding ING GROEP NV or give up 2.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.54%
Values	Daily Returns

Pfizer Inc  vs.  ING GROEP NV

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 uncertain 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.

ING GROEP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING GROEP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 456837AW3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and 456837AW3

The main advantage of trading using opposite Pfizer and 456837AW3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, 456837AW3 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 456837AW3 will offset losses from the drop in 456837AW3's long position.

The idea behind Pfizer Inc and ING GROEP NV 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.