Correlation Between BCB Bancorp and PFIZER

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

Diversification Opportunities for BCB Bancorp and PFIZER

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between BCB and PFIZER is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and PFIZER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp i.e., BCB Bancorp and PFIZER go up and down completely randomly.

Pair Corralation between BCB Bancorp and PFIZER

Given the investment horizon of 90 days BCB Bancorp is expected to generate 6.2 times more return on investment than PFIZER. However, BCB Bancorp is 6.2 times more volatile than PFIZER INC. It trades about 0.04 of its potential returns per unit of risk. PFIZER INC is currently generating about -0.01 per unit of risk. If you would invest  1,121  in BCB Bancorp on September 2, 2024 and sell it today you would earn a total of  206.00  from holding BCB Bancorp or generate 18.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy94.76%
ValuesDaily Returns

BCB Bancorp  vs.  PFIZER INC

 Performance 
       Timeline  
BCB Bancorp 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BCB Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, BCB Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.
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.

BCB Bancorp and PFIZER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BCB Bancorp and PFIZER

The main advantage of trading using opposite BCB Bancorp and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCB Bancorp 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 BCB Bancorp 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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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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