Correlation Between Apple and Pfizer
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and Pfizer Inc CDR, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Pfizer.
Diversification Opportunities for Apple and Pfizer
Very good diversification
The 3 months correlation between Apple and Pfizer is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Pfizer Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc CDR and Apple 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 Apple Inc CDR 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 CDR has no effect on the direction of Apple i.e., Apple and Pfizer go up and down completely randomly.
Pair Corralation between Apple and Pfizer
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.87 times more return on investment than Pfizer. However, Apple Inc CDR is 1.15 times less risky than Pfizer. It trades about -0.05 of its potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.08 per unit of risk. If you would invest 3,425 in Apple Inc CDR on October 26, 2024 and sell it today you would lose (155.00) from holding Apple Inc CDR or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. Pfizer Inc CDR
Performance |
| Timeline |
| Apple Inc CDR |
| Pfizer Inc CDR |
Apple and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Pfizer
The main advantage of trading using opposite Apple and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. North American Construction | Apple vs. Forsys Metals Corp | Apple vs. Pace Metals | Apple vs. Andlauer Healthcare Gr |
| Pfizer vs. Canlan Ice Sports | Pfizer vs. Broadcom | Pfizer vs. TGS Esports | Pfizer vs. Storage Vault Canada |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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