Correlation Between Pfizer and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Pfizer and CGX Energy 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 CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and CGX Energy, you can compare the effects of market volatilities on Pfizer and CGX Energy 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 CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and CGX Energy.
Diversification Opportunities for Pfizer and CGX Energy
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and CGX is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy 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 CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Pfizer i.e., Pfizer and CGX Energy go up and down completely randomly.
Pair Corralation between Pfizer and CGX Energy
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.19 times more return on investment than CGX Energy. However, Pfizer Inc is 5.33 times less risky than CGX Energy. It trades about -0.04 of its potential returns per unit of risk. CGX Energy is currently generating about -0.02 per unit of risk. If you would invest 2,846 in Pfizer Inc on September 1, 2024 and sell it today you would lose (225.00) from holding Pfizer Inc or give up 7.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. CGX Energy
Performance |
| Timeline |
| Pfizer Inc |
| CGX Energy |
Pfizer and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and CGX Energy
The main advantage of trading using opposite Pfizer and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, CGX Energy 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 CGX Energy will offset losses from the drop in CGX Energy's long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
| CGX Energy vs. Avanti Energy | CGX Energy vs. Desert Mountain Energy | CGX Energy vs. Royal Helium | CGX Energy vs. Eco Oil Gas |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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