Correlation Between Pfizer and Russel Metals
Can any of the company-specific risk be diversified away by investing in both Pfizer and Russel Metals 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 Russel Metals 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 Russel Metals, you can compare the effects of market volatilities on Pfizer and Russel Metals 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 Russel Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Russel Metals.
Diversification Opportunities for Pfizer and Russel Metals
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and Russel is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and Russel Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russel Metals 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 Russel Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russel Metals has no effect on the direction of Pfizer i.e., Pfizer and Russel Metals go up and down completely randomly.
Pair Corralation between Pfizer and Russel Metals
Assuming the 90 days trading horizon Pfizer Inc CDR is expected to under-perform the Russel Metals. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc CDR is 1.18 times less risky than Russel Metals. The stock trades about -0.17 of its potential returns per unit of risk. The Russel Metals is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 3,841 in Russel Metals on September 1, 2024 and sell it today you would earn a total of 755.00 from holding Russel Metals or generate 19.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pfizer Inc CDR vs. Russel Metals
Performance |
| Timeline |
| Pfizer Inc CDR |
| Russel Metals |
Pfizer and Russel Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Russel Metals
The main advantage of trading using opposite Pfizer and Russel Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Russel Metals 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 Russel Metals will offset losses from the drop in Russel Metals' long position.| Pfizer vs. Perseus Mining | Pfizer vs. MAG Silver Corp | Pfizer vs. Capstone Mining Corp | Pfizer vs. Boat Rocker Media |
| Russel Metals vs. Finning International | Russel Metals vs. Transcontinental | Russel Metals vs. Toromont Industries | Russel Metals vs. IGM Financial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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