Correlation Between Pfizer and Stampede Drilling
Can any of the company-specific risk be diversified away by investing in both Pfizer and Stampede Drilling 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 Stampede Drilling 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 Stampede Drilling, you can compare the effects of market volatilities on Pfizer and Stampede Drilling 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 Stampede Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Stampede Drilling.
Diversification Opportunities for Pfizer and Stampede Drilling
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pfizer and Stampede is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling 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 Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Pfizer i.e., Pfizer and Stampede Drilling go up and down completely randomly.
Pair Corralation between Pfizer and Stampede Drilling
Assuming the 90 days trading horizon Pfizer Inc CDR is expected to generate 0.39 times more return on investment than Stampede Drilling. However, Pfizer Inc CDR is 2.54 times less risky than Stampede Drilling. It trades about -0.05 of its potential returns per unit of risk. Stampede Drilling is currently generating about -0.04 per unit of risk. If you would invest 1,343 in Pfizer Inc CDR on September 2, 2024 and sell it today you would lose (126.00) from holding Pfizer Inc CDR or give up 9.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc CDR vs. Stampede Drilling
Performance |
| Timeline |
| Pfizer Inc CDR |
| Stampede Drilling |
Pfizer and Stampede Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Stampede Drilling
The main advantage of trading using opposite Pfizer and Stampede Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Stampede Drilling 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 Stampede Drilling will offset losses from the drop in Stampede Drilling's long position.| Pfizer vs. Information Services | Pfizer vs. Datable Technology Corp | Pfizer vs. Maple Leaf Foods | Pfizer vs. Storage Vault Canada |
| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX Energy Services |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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