Correlation Between Pfizer and ATCO
Can any of the company-specific risk be diversified away by investing in both Pfizer and ATCO 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 ATCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc CDR and ATCO, you can compare the effects of market volatilities on Pfizer and ATCO 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 ATCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and ATCO.
Diversification Opportunities for Pfizer and ATCO
Very good diversification
The 3 months correlation between Pfizer and ATCO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO 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 CDR are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of Pfizer i.e., Pfizer and ATCO go up and down completely randomly.
Pair Corralation between Pfizer and ATCO
Assuming the 90 days trading horizon Pfizer Inc CDR is expected to generate 0.7 times more return on investment than ATCO. However, Pfizer Inc CDR is 1.44 times less risky than ATCO. It trades about 0.1 of its potential returns per unit of risk. ATCO is currently generating about -0.03 per unit of risk. If you would invest 1,199 in Pfizer Inc CDR on September 27, 2024 and sell it today you would earn a total of 41.00 from holding Pfizer Inc CDR or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc CDR vs. ATCO
Performance |
| Timeline |
| Pfizer Inc CDR |
| ATCO |
Pfizer and ATCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and ATCO
The main advantage of trading using opposite Pfizer and ATCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, ATCO 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 ATCO will offset losses from the drop in ATCO's long position.| Pfizer vs. Eddy Smart Home | Pfizer vs. Metalero Mining Corp | Pfizer vs. Advent Wireless | Pfizer vs. Nano One Materials |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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