Correlation Between Pfizer and Cara Therapeutic
Can any of the company-specific risk be diversified away by investing in both Pfizer and Cara Therapeutic 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 Cara Therapeutic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Cara Therapeutic, you can compare the effects of market volatilities on Pfizer and Cara Therapeutic 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 Cara Therapeutic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Cara Therapeutic.
Diversification Opportunities for Pfizer and Cara Therapeutic
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pfizer and Cara is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Cara Therapeutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cara Therapeutic 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 Cara Therapeutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cara Therapeutic has no effect on the direction of Pfizer i.e., Pfizer and Cara Therapeutic go up and down completely randomly.
Pair Corralation between Pfizer and Cara Therapeutic
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.23 times more return on investment than Cara Therapeutic. However, Pfizer Inc is 4.39 times less risky than Cara Therapeutic. It trades about -0.07 of its potential returns per unit of risk. Cara Therapeutic is currently generating about -0.08 per unit of risk. If you would invest 4,573 in Pfizer Inc on August 26, 2024 and sell it today you would lose (2,008) from holding Pfizer Inc or give up 43.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Cara Therapeutic
Performance |
| Timeline |
| Pfizer Inc |
| Cara Therapeutic |
Pfizer and Cara Therapeutic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Cara Therapeutic
The main advantage of trading using opposite Pfizer and Cara Therapeutic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Cara Therapeutic 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 Cara Therapeutic will offset losses from the drop in Cara Therapeutic's long position.| Pfizer vs. AbbVie Inc | Pfizer vs. Merck Company | Pfizer vs. Eli Lilly and | Pfizer vs. Bristol Myers Squibb |
| Cara Therapeutic vs. 22nd Century Group | Cara Therapeutic vs. Corbus Pharmaceuticals Holding | Cara Therapeutic vs. Cannabis Sativa | Cara Therapeutic vs. General Cannabis Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |