Correlation Between Pfizer and Enel Generacion
Can any of the company-specific risk be diversified away by investing in both Pfizer and Enel Generacion 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 Pfizer and Enel Generacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Enel Generacion Costanera, you can compare the effects of market volatilities on Pfizer and Enel Generacion 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 Pfizer with a short position of Enel Generacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Enel Generacion.
Diversification Opportunities for Pfizer and Enel Generacion
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and Enel is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Enel Generacion Costanera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Generacion Costanera and Pfizer 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 Pfizer Inc are associated (or correlated) with Enel Generacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Generacion Costanera has no effect on the direction of Pfizer i.e., Pfizer and Enel Generacion go up and down completely randomly.
Pair Corralation between Pfizer and Enel Generacion
Assuming the 90 days trading horizon Pfizer Inc is expected to under-perform the Enel Generacion. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.35 times less risky than Enel Generacion. The stock trades about -0.07 of its potential returns per unit of risk. The Enel Generacion Costanera is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 39,200 in Enel Generacion Costanera on September 1, 2024 and sell it today you would earn a total of 3,150 from holding Enel Generacion Costanera or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Enel Generacion Costanera
Performance |
| Timeline |
| Pfizer Inc |
| Enel Generacion Costanera |
Pfizer and Enel Generacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Enel Generacion
The main advantage of trading using opposite Pfizer and Enel Generacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Enel Generacion 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 Enel Generacion will offset losses from the drop in Enel Generacion's long position.| Pfizer vs. Transportadora de Gas | Pfizer vs. Harmony Gold Mining | Pfizer vs. United States Steel | Pfizer vs. Agrometal SAI |
| Enel Generacion vs. Empresa Distribuidora Electrica | Enel Generacion vs. Longvie SA | Enel Generacion vs. American Express Co | Enel Generacion vs. United States Steel |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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