Correlation Between Avient Corp and PFIZER

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Can any of the company-specific risk be diversified away by investing in both Avient Corp 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 Avient Corp and PFIZER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avient Corp and PFIZER INC, you can compare the effects of market volatilities on Avient Corp 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 Avient Corp with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and PFIZER.

Diversification Opportunities for Avient Corp and PFIZER

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Avient and PFIZER is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and PFIZER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC and Avient Corp 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 Avient Corp 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 Avient Corp i.e., Avient Corp and PFIZER go up and down completely randomly.

Pair Corralation between Avient Corp and PFIZER

Given the investment horizon of 90 days Avient Corp is expected to generate 2.19 times more return on investment than PFIZER. However, Avient Corp is 2.19 times more volatile than PFIZER INC. It trades about 0.09 of its potential returns per unit of risk. PFIZER INC is currently generating about -0.11 per unit of risk. If you would invest  4,705  in Avient Corp on September 2, 2024 and sell it today you would earn a total of  420.00  from holding Avient Corp or generate 8.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy84.38%
ValuesDaily Returns

Avient Corp  vs.  PFIZER INC

 Performance 
       Timeline  
Avient Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Avient Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
PFIZER INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest stock price disturbance, may contribute to short-term losses for the investors.

Avient Corp and PFIZER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avient Corp and PFIZER

The main advantage of trading using opposite Avient Corp and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp 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.
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The idea behind Avient Corp 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.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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