Correlation Between Pfizer and BASF SE
Can any of the company-specific risk be diversified away by investing in both Pfizer and BASF SE 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 BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and BASF SE NA, you can compare the effects of market volatilities on Pfizer and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and BASF SE.
Diversification Opportunities for Pfizer and BASF SE
Poor diversification
The 3 months correlation between Pfizer and BASF is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and BASF SE NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE NA 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE NA has no effect on the direction of Pfizer i.e., Pfizer and BASF SE go up and down completely randomly.
Pair Corralation between Pfizer and BASF SE
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the BASF SE. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.53 times less risky than BASF SE. The stock trades about -0.05 of its potential returns per unit of risk. The BASF SE NA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,687 in BASF SE NA on August 31, 2024 and sell it today you would lose (332.00) from holding BASF SE NA or give up 7.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.9% |
| Values | Daily Returns |
Pfizer Inc vs. BASF SE NA
Performance |
| Timeline |
| Pfizer Inc |
| BASF SE NA |
Pfizer and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and BASF SE
The main advantage of trading using opposite Pfizer and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Pfizer vs. Johnson Johnson | Pfizer vs. RLJ Lodging Trust | Pfizer vs. Aquagold International | Pfizer vs. Stepstone Group |
| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. BASF SE ADR | BASF SE vs. Braskem SA Class | BASF SE vs. Celanese |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |