Correlation Between PFIZER and Pembina Pipeline

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

By analyzing existing cross correlation between PFIZER INC 275 and Pembina Pipeline, you can compare the effects of market volatilities on PFIZER and Pembina Pipeline 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 Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of PFIZER and Pembina Pipeline.

Diversification Opportunities for PFIZER and Pembina Pipeline

0.27

Correlation Coefficient

PFIZER  Pembina Pipeline

Modest diversification

The 3 months correlation between PFIZER and Pembina is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PFIZER INC 275 and Pembina Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline 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 275 are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline has no effect on the direction of PFIZER i.e., PFIZER and Pembina Pipeline go up and down completely randomly.

Pair Corralation between PFIZER and Pembina Pipeline

If you would invest  1,583  in Pembina Pipeline on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Pembina Pipeline or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

PFIZER INC 275  vs.  Pembina Pipeline

PFIZER INC 275

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 275 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.

Pembina Pipeline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pembina Pipeline is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PFIZER and Pembina Pipeline

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

The idea behind PFIZER INC 275 and Pembina Pipeline 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.