Correlation Between Pfizer and NBCUNIVERSAL

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

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

Diversification Opportunities for Pfizer and NBCUNIVERSAL

-0.43

Correlation Coefficient

Pfizer  NBCUNIVERSAL

Very good diversification

The 3 months correlation between Pfizer and NBCUNIVERSAL is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of Pfizer i.e., Pfizer and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between Pfizer and NBCUNIVERSAL

Considering the 90-day investment horizon Pfizer Inc is expected to generate 1.13 times more return on investment than NBCUNIVERSAL. However, Pfizer is 1.13 times more volatile than NBCUNIVERSAL MEDIA LLC. It trades about -0.07 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about -0.15 per unit of risk. If you would invest  2,875  in Pfizer Inc on October 7, 2024 and sell it today you would lose (216.00) from holding Pfizer Inc or give up 7.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

Pfizer Inc  vs.  NBCUNIVERSAL MEDIA LLC

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 abnormal 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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL MEDIA LLC investors.

Pair Trading with Pfizer and NBCUNIVERSAL

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

The idea behind Pfizer Inc and NBCUNIVERSAL MEDIA LLC 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.