Correlation Between High Performance and PFIZER

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

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

Diversification Opportunities for High Performance and PFIZER

0.0

Correlation Coefficient

High Performance  PFIZER

Pay attention - limited upside

The 3 months correlation between High and PFIZER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding High Performance Beverages and PFIZER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC and High Performance 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 High Performance Beverages 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 has no effect on the direction of High Performance i.e., High Performance and PFIZER go up and down completely randomly.

Pair Corralation between High Performance and PFIZER

If you would invest  8,644  in PFIZER INC on October 8, 2024 and sell it today you would earn a total of  101.00  from holding PFIZER INC or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

High Performance Beverages  vs.  PFIZER INC

High Performance Bev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Performance Beverages has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, High Performance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with High Performance and PFIZER

The main advantage of trading using opposite High Performance and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Performance 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 High Performance Beverages and PFIZER INC 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.