Correlation Between Pfizer and MARRIOTT

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

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

Diversification Opportunities for Pfizer and MARRIOTT

-0.02

Correlation Coefficient

Pfizer  MARRIOTT

Good diversification

The 3 months correlation between Pfizer and MARRIOTT is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and MARRIOTT OWNERSHIP RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT OWNERSHIP 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 MARRIOTT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARRIOTT OWNERSHIP has no effect on the direction of Pfizer i.e., Pfizer and MARRIOTT go up and down completely randomly.

Pair Corralation between Pfizer and MARRIOTT

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.67 times more return on investment than MARRIOTT. However, Pfizer Inc is 1.49 times less risky than MARRIOTT. It trades about 0.01 of its potential returns per unit of risk. MARRIOTT OWNERSHIP RESORTS is currently generating about -0.02 per unit of risk. If you would invest  2,628  in Pfizer Inc on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Pfizer Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Pfizer Inc  vs.  MARRIOTT OWNERSHIP RESORTS

Pfizer Inc

Risk-Adjusted Performance

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

MARRIOTT OWNERSHIP

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Pfizer and MARRIOTT

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

The idea behind Pfizer Inc and MARRIOTT OWNERSHIP RESORTS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.