Correlation Between Pfizer and Teucrium Wheat

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

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

Diversification Opportunities for Pfizer and Teucrium Wheat

0.03

Correlation Coefficient

Pfizer  Teucrium Wheat

Significant diversification

The 3 months correlation between Pfizer and Teucrium is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Teucrium Wheat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Wheat 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 Teucrium Wheat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Wheat has no effect on the direction of Pfizer i.e., Pfizer and Teucrium Wheat go up and down completely randomly.

Pair Corralation between Pfizer and Teucrium Wheat

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.78 times more return on investment than Teucrium Wheat. However, Pfizer Inc is 1.28 times less risky than Teucrium Wheat. It trades about -0.05 of its potential returns per unit of risk. Teucrium Wheat is currently generating about -0.15 per unit of risk. If you would invest  2,620  in Pfizer Inc on December 5, 2024 and sell it today you would lose (34.50) from holding Pfizer Inc or give up 1.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Pfizer Inc  vs.  Teucrium Wheat

Pfizer Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Teucrium Wheat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teucrium Wheat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Teucrium Wheat is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pfizer and Teucrium Wheat

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

The idea behind Pfizer Inc and Teucrium Wheat 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.