Correlation Between PFIZER and Academy Sports

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

By analyzing existing cross correlation between PFIZER INC 43 and Academy Sports Outdoors, you can compare the effects of market volatilities on PFIZER and Academy Sports 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 Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of PFIZER and Academy Sports.

Diversification Opportunities for PFIZER and Academy Sports

0.16

Correlation Coefficient

PFIZER  Academy Sports

Average diversification

The 3 months correlation between PFIZER and Academy is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PFIZER INC 43 and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors 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 43 are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of PFIZER i.e., PFIZER and Academy Sports go up and down completely randomly.

Pair Corralation between PFIZER and Academy Sports

Assuming the 90 days trading horizon PFIZER INC 43 is expected to generate 0.37 times more return on investment than Academy Sports. However, PFIZER INC 43 is 2.73 times less risky than Academy Sports. It trades about -0.01 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.01 per unit of risk. If you would invest  8,920  in PFIZER INC 43 on October 9, 2024 and sell it today you would lose (287.00) from holding PFIZER INC 43 or give up 3.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.62%
Values	Daily Returns

PFIZER INC 43  vs.  Academy Sports Outdoors

PFIZER INC 43

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 43 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Academy Sports Outdoors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Academy Sports is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PFIZER and Academy Sports

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

The idea behind PFIZER INC 43 and Academy Sports Outdoors 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.