Correlation Between Pfizer and Molinos Agro
Can any of the company-specific risk be diversified away by investing in both Pfizer and Molinos Agro 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 Molinos Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Molinos Agro SA, you can compare the effects of market volatilities on Pfizer and Molinos Agro 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 Molinos Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Molinos Agro.
Diversification Opportunities for Pfizer and Molinos Agro
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pfizer and Molinos is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Molinos Agro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Agro 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 Molinos Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Agro SA has no effect on the direction of Pfizer i.e., Pfizer and Molinos Agro go up and down completely randomly.
Pair Corralation between Pfizer and Molinos Agro
Assuming the 90 days trading horizon Pfizer is expected to generate 14.33 times less return on investment than Molinos Agro. But when comparing it to its historical volatility, Pfizer Inc is 1.04 times less risky than Molinos Agro. It trades about 0.01 of its potential returns per unit of risk. Molinos Agro SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 287,079 in Molinos Agro SA on August 27, 2024 and sell it today you would earn a total of 1,855,421 from holding Molinos Agro SA or generate 646.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Molinos Agro SA
Performance |
| Timeline |
| Pfizer Inc |
| Molinos Agro SA |
Pfizer and Molinos Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Molinos Agro
The main advantage of trading using opposite Pfizer and Molinos Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Molinos Agro 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 Molinos Agro will offset losses from the drop in Molinos Agro's long position.The idea behind Pfizer Inc and Molinos Agro 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.| Molinos Agro vs. American Express Co | Molinos Agro vs. United States Steel | Molinos Agro vs. Capex SA | Molinos Agro vs. Central Puerto SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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