Correlation Between Pfizer and Collegium Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Pfizer and Collegium Pharmaceutical 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 Collegium Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Collegium Pharmaceutical, you can compare the effects of market volatilities on Pfizer and Collegium Pharmaceutical 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 Collegium Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Collegium Pharmaceutical.
Diversification Opportunities for Pfizer and Collegium Pharmaceutical
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pfizer and Collegium is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical 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 Collegium Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegium Pharmaceutical has no effect on the direction of Pfizer i.e., Pfizer and Collegium Pharmaceutical go up and down completely randomly.
Pair Corralation between Pfizer and Collegium Pharmaceutical
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.77 times more return on investment than Collegium Pharmaceutical. However, Pfizer Inc is 1.3 times less risky than Collegium Pharmaceutical. It trades about -0.07 of its potential returns per unit of risk. Collegium Pharmaceutical is currently generating about -0.19 per unit of risk. If you would invest 2,642 in Pfizer Inc on November 9, 2024 and sell it today you would lose (59.00) from holding Pfizer Inc or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Collegium Pharmaceutical
Performance |
| Timeline |
| Pfizer Inc |
| Collegium Pharmaceutical |
Pfizer and Collegium Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Collegium Pharmaceutical
The main advantage of trading using opposite Pfizer and Collegium Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Collegium Pharmaceutical 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 Collegium Pharmaceutical will offset losses from the drop in Collegium Pharmaceutical's long position.| Pfizer vs. AbbVie Inc | Pfizer vs. Merck Company | Pfizer vs. Eli Lilly and | Pfizer vs. Bristol Myers Squibb |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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