Correlation Between Pfizer and Atlantic Wind

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Can any of the company-specific risk be diversified away by investing in both Pfizer and Atlantic Wind 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 Atlantic Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Atlantic Wind Solar, you can compare the effects of market volatilities on Pfizer and Atlantic Wind 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 Atlantic Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Atlantic Wind.

Diversification Opportunities for Pfizer and Atlantic Wind

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Pfizer and Atlantic is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Atlantic Wind Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Wind Solar 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 Atlantic Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Wind Solar has no effect on the direction of Pfizer i.e., Pfizer and Atlantic Wind go up and down completely randomly.

Pair Corralation between Pfizer and Atlantic Wind

Considering the 90-day investment horizon Pfizer is expected to generate 8.2 times less return on investment than Atlantic Wind. But when comparing it to its historical volatility, Pfizer Inc is 6.5 times less risky than Atlantic Wind. It trades about 0.12 of its potential returns per unit of risk. Atlantic Wind Solar is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2.75  in Atlantic Wind Solar on November 4, 2024 and sell it today you would earn a total of  1.41  from holding Atlantic Wind Solar or generate 51.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Atlantic Wind Solar

 Performance 
       Timeline  
Pfizer Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Atlantic Wind Solar 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Wind Solar are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Atlantic Wind disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pfizer and Atlantic Wind Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Atlantic Wind

The main advantage of trading using opposite Pfizer and Atlantic Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Atlantic Wind 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 Atlantic Wind will offset losses from the drop in Atlantic Wind's long position.
The idea behind Pfizer Inc and Atlantic Wind Solar 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.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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