Correlation Between Pfizer and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Pfizer and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Wells Fargo, you can compare the effects of market volatilities on Pfizer and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Wells Fargo.
Diversification Opportunities for Pfizer and Wells Fargo
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and Wells is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo has no effect on the direction of Pfizer i.e., Pfizer and Wells Fargo go up and down completely randomly.
Pair Corralation between Pfizer and Wells Fargo
Assuming the 90 days trading horizon Pfizer Inc is expected to under-perform the Wells Fargo. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.08 times less risky than Wells Fargo. The stock trades about -0.07 of its potential returns per unit of risk. The Wells Fargo is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,483,450 in Wells Fargo on September 1, 2024 and sell it today you would earn a total of 236,550 from holding Wells Fargo or generate 15.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Pfizer Inc vs. Wells Fargo
Performance |
| Timeline |
| Pfizer Inc |
| Wells Fargo |
Pfizer and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Wells Fargo
The main advantage of trading using opposite Pfizer and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Pfizer vs. Transportadora de Gas | Pfizer vs. Harmony Gold Mining | Pfizer vs. United States Steel | Pfizer vs. Agrometal SAI |
| Wells Fargo vs. Harmony Gold Mining | Wells Fargo vs. United States Steel | Wells Fargo vs. Agrometal SAI | Wells Fargo vs. Telecom Argentina |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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