Correlation Between Pfizer and California Resources
Can any of the company-specific risk be diversified away by investing in both Pfizer and California Resources 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 California Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and California Resources, you can compare the effects of market volatilities on Pfizer and California Resources 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 California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and California Resources.
Diversification Opportunities for Pfizer and California Resources
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and California is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and California Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources 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 California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources has no effect on the direction of Pfizer i.e., Pfizer and California Resources go up and down completely randomly.
Pair Corralation between Pfizer and California Resources
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the California Resources. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 4.86 times less risky than California Resources. The stock trades about -0.06 of its potential returns per unit of risk. The California Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,470 in California Resources on September 2, 2024 and sell it today you would earn a total of 242.00 from holding California Resources or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.94% |
| Values | Daily Returns |
Pfizer Inc vs. California Resources
Performance |
| Timeline |
| Pfizer Inc |
| California Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Pfizer and California Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and California Resources
The main advantage of trading using opposite Pfizer and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, California Resources 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 California Resources will offset losses from the drop in California Resources' long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
| California Resources vs. Cardinal Energy | California Resources vs. Spartan Delta Corp | California Resources vs. Delek Group | California Resources vs. Bonterra Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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