Correlation Between Pfizer and Metrogas
Can any of the company-specific risk be diversified away by investing in both Pfizer and Metrogas 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 Metrogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Metrogas SA, you can compare the effects of market volatilities on Pfizer and Metrogas 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 Metrogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Metrogas.
Diversification Opportunities for Pfizer and Metrogas
Pay attention - limited upside
The 3 months correlation between Pfizer and Metrogas is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Metrogas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrogas SA 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 Metrogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrogas SA has no effect on the direction of Pfizer i.e., Pfizer and Metrogas go up and down completely randomly.
Pair Corralation between Pfizer and Metrogas
Assuming the 90 days trading horizon Pfizer is expected to generate 23.0 times less return on investment than Metrogas. But when comparing it to its historical volatility, Pfizer Inc is 1.34 times less risky than Metrogas. It trades about 0.01 of its potential returns per unit of risk. Metrogas SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 8,720 in Metrogas SA on August 27, 2024 and sell it today you would earn a total of 207,780 from holding Metrogas SA or generate 2382.8% 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. Metrogas SA
Performance |
| Timeline |
| Pfizer Inc |
| Metrogas SA |
Pfizer and Metrogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Metrogas
The main advantage of trading using opposite Pfizer and Metrogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Metrogas 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 Metrogas will offset losses from the drop in Metrogas' long position.The idea behind Pfizer Inc and Metrogas SA 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.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |