Correlation Between Pfizer and Waste

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

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

Diversification Opportunities for Pfizer and Waste

0.17

Correlation Coefficient

Pfizer  Waste

Average diversification

The 3 months correlation between Pfizer and Waste is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Waste Pro USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Pro USA 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 Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Pro USA has no effect on the direction of Pfizer i.e., Pfizer and Waste go up and down completely randomly.

Pair Corralation between Pfizer and Waste

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Waste. In addition to that, Pfizer is 2.47 times more volatile than Waste Pro USA. It trades about -0.06 of its total potential returns per unit of risk. Waste Pro USA is currently generating about -0.13 per unit of volatility. If you would invest  9,925  in Waste Pro USA on September 3, 2024 and sell it today you would lose (275.00) from holding Waste Pro USA or give up 2.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	59.38%
Values	Daily Returns

Pfizer Inc  vs.  Waste Pro USA

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 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.

Waste Pro USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Pro USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Waste 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 Waste

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

The idea behind Pfizer Inc and Waste Pro USA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.