Correlation Between BBB Foods and PFIZER

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

By analyzing existing cross correlation between BBB Foods and PFIZER INC 43, you can compare the effects of market volatilities on BBB Foods and PFIZER 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 BBB Foods with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and PFIZER.

Diversification Opportunities for BBB Foods and PFIZER

-0.44

Correlation Coefficient

BBB Foods  PFIZER

Very good diversification

The 3 months correlation between BBB and PFIZER is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and PFIZER INC 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 43 and BBB Foods 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 BBB Foods are associated (or correlated) with PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC 43 has no effect on the direction of BBB Foods i.e., BBB Foods and PFIZER go up and down completely randomly.

Pair Corralation between BBB Foods and PFIZER

Given the investment horizon of 90 days BBB Foods is expected to under-perform the PFIZER. In addition to that, BBB Foods is 1.86 times more volatile than PFIZER INC 43. It trades about -0.08 of its total potential returns per unit of risk. PFIZER INC 43 is currently generating about 0.14 per unit of volatility. If you would invest  8,536  in PFIZER INC 43 on December 23, 2024 and sell it today you would earn a total of  744.00  from holding PFIZER INC 43 or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.69%
Values	Daily Returns

BBB Foods  vs.  PFIZER INC 43

BBB Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PFIZER INC 43

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PFIZER INC 43 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, PFIZER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BBB Foods and PFIZER

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

The idea behind BBB Foods and PFIZER INC 43 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.