Correlation Between Pfizer and Kaiser

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

By analyzing existing cross correlation between Pfizer Inc and Kaiser Aluminum 4625, you can compare the effects of market volatilities on Pfizer and Kaiser 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 Kaiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Kaiser.

Diversification Opportunities for Pfizer and Kaiser

0.26

Correlation Coefficient

Pfizer  Kaiser

Modest diversification

The 3 months correlation between Pfizer and Kaiser is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Kaiser Aluminum 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 4625 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 Kaiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum 4625 has no effect on the direction of Pfizer i.e., Pfizer and Kaiser go up and down completely randomly.

Pair Corralation between Pfizer and Kaiser

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.85 times more return on investment than Kaiser. However, Pfizer Inc is 1.17 times less risky than Kaiser. It trades about 0.13 of its potential returns per unit of risk. Kaiser Aluminum 4625 is currently generating about -0.23 per unit of risk. If you would invest  2,610  in Pfizer Inc on October 9, 2024 and sell it today you would earn a total of  103.00  from holding Pfizer Inc or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Pfizer Inc  vs.  Kaiser Aluminum 4625

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.

Kaiser Aluminum 4625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaiser Aluminum 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Kaiser Aluminum 4625 investors.

Pair Trading with Pfizer and Kaiser

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

The idea behind Pfizer Inc and Kaiser Aluminum 4625 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.