Correlation Between Leading Edge and Pfizer
Can any of the company-specific risk be diversified away by investing in both Leading Edge 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 Leading Edge and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Pfizer Inc CDR, you can compare the effects of market volatilities on Leading Edge 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 Leading Edge with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Pfizer.
Diversification Opportunities for Leading Edge and Pfizer
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leading and Pfizer is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials 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 Leading Edge 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 Leading Edge Materials 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 Leading Edge i.e., Leading Edge and Pfizer go up and down completely randomly.
Pair Corralation between Leading Edge and Pfizer
Assuming the 90 days horizon Leading Edge Materials is expected to under-perform the Pfizer. In addition to that, Leading Edge is 2.89 times more volatile than Pfizer Inc CDR. It trades about -0.02 of its total potential returns per unit of risk. Pfizer Inc CDR is currently generating about 0.12 per unit of volatility. If you would invest 1,154 in Pfizer Inc CDR on October 16, 2024 and sell it today you would earn a total of 71.00 from holding Pfizer Inc CDR or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. Pfizer Inc CDR
Performance |
| Timeline |
| Leading Edge Materials |
| Pfizer Inc CDR |
Leading Edge and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Pfizer
The main advantage of trading using opposite Leading Edge and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge 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.| Leading Edge vs. Hannan Metals | Leading Edge vs. Mkango Resources | Leading Edge vs. Elcora Advanced Materials | Leading Edge vs. Midnight Sun Mining |
| Pfizer vs. Advent Wireless | Pfizer vs. Champion Gaming Group | Pfizer vs. HOME DEPOT CDR | Pfizer vs. Brookfield Office Properties |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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