Correlation Between AUTO TRADER and Pfizer
Can any of the company-specific risk be diversified away by investing in both AUTO TRADER 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 AUTO TRADER and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUTO TRADER ADR and Pfizer Inc, you can compare the effects of market volatilities on AUTO TRADER 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 AUTO TRADER with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and Pfizer.
Diversification Opportunities for AUTO TRADER and Pfizer
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AUTO and Pfizer is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and AUTO TRADER 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 AUTO TRADER ADR 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 AUTO TRADER i.e., AUTO TRADER and Pfizer go up and down completely randomly.
Pair Corralation between AUTO TRADER and Pfizer
Assuming the 90 days trading horizon AUTO TRADER ADR is expected to generate 0.5 times more return on investment than Pfizer. However, AUTO TRADER ADR is 2.02 times less risky than Pfizer. It trades about 0.33 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.05 per unit of risk. If you would invest 230.00 in AUTO TRADER ADR on September 12, 2024 and sell it today you would earn a total of 16.00 from holding AUTO TRADER ADR or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AUTO TRADER ADR vs. Pfizer Inc
Performance |
| Timeline |
| AUTO TRADER ADR |
| Pfizer Inc |
AUTO TRADER and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUTO TRADER and Pfizer
The main advantage of trading using opposite AUTO TRADER and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTO TRADER 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.| AUTO TRADER vs. Tencent Holdings | AUTO TRADER vs. Superior Plus Corp | AUTO TRADER vs. SIVERS SEMICONDUCTORS AB | AUTO TRADER vs. NorAm Drilling AS |
| Pfizer vs. MARKET VECTR RETAIL | Pfizer vs. Major Drilling Group | Pfizer vs. AUTO TRADER ADR | Pfizer vs. GRIFFIN MINING LTD |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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