Correlation Between Financial and Pfizer
Can any of the company-specific risk be diversified away by investing in both Financial 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 Financial and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Pfizer Inc CDR, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Pfizer.
Diversification Opportunities for Financial and Pfizer
Weak diversification
The 3 months correlation between Financial and Pfizer is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split 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 Financial 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 Financial 15 Split 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 Financial i.e., Financial and Pfizer go up and down completely randomly.
Pair Corralation between Financial and Pfizer
Assuming the 90 days trading horizon Financial 15 Split is expected to generate 0.18 times more return on investment than Pfizer. However, Financial 15 Split is 5.49 times less risky than Pfizer. It trades about 0.65 of its potential returns per unit of risk. Pfizer Inc CDR is currently generating about 0.01 per unit of risk. If you would invest 1,064 in Financial 15 Split on November 7, 2024 and sell it today you would earn a total of 36.00 from holding Financial 15 Split or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Financial 15 Split vs. Pfizer Inc CDR
Performance |
| Timeline |
| Financial 15 Split |
| Pfizer Inc CDR |
Financial and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Pfizer
The main advantage of trading using opposite Financial and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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.| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
| Pfizer vs. 2028 Investment Grade | Pfizer vs. Diversified Royalty Corp | Pfizer vs. Economic Investment Trust | Pfizer vs. Orbit Garant Drilling |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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