Correlation Between Capital One and Pfizer
Can any of the company-specific risk be diversified away by investing in both Capital One 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 Capital One and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and Pfizer Inc, you can compare the effects of market volatilities on Capital One 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 Capital One with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Pfizer.
Diversification Opportunities for Capital One and Pfizer
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capital and Pfizer is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Capital One 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 Capital One Financial 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 Capital One i.e., Capital One and Pfizer go up and down completely randomly.
Pair Corralation between Capital One and Pfizer
Assuming the 90 days trading horizon Capital One Financial is expected to generate 1.67 times more return on investment than Pfizer. However, Capital One is 1.67 times more volatile than Pfizer Inc. It trades about 0.26 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.05 per unit of risk. If you would invest 267,115 in Capital One Financial on September 4, 2024 and sell it today you would earn a total of 132,885 from holding Capital One Financial or generate 49.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Pfizer Inc
Performance |
| Timeline |
| Capital One Financial |
| Pfizer Inc |
Capital One and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Pfizer
The main advantage of trading using opposite Capital One and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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.| Capital One vs. Mastercard Incorporated | Capital One vs. The Western Union | Capital One vs. Gentera SAB de | Capital One vs. Financiera Independencia SAB |
| Pfizer vs. The Bank of | Pfizer vs. UnitedHealth Group Incorporated | Pfizer vs. Capital One Financial | Pfizer vs. Cognizant Technology Solutions |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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