Correlation Between Pfizer and Entera Bio
Can any of the company-specific risk be diversified away by investing in both Pfizer and Entera Bio 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 Entera Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Entera Bio, you can compare the effects of market volatilities on Pfizer and Entera Bio 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 Entera Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Entera Bio.
Diversification Opportunities for Pfizer and Entera Bio
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and Entera is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Entera Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entera Bio 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 Entera Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entera Bio has no effect on the direction of Pfizer i.e., Pfizer and Entera Bio go up and down completely randomly.
Pair Corralation between Pfizer and Entera Bio
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.52 times more return on investment than Entera Bio. However, Pfizer Inc is 1.91 times less risky than Entera Bio. It trades about -0.16 of its potential returns per unit of risk. Entera Bio is currently generating about -0.13 per unit of risk. If you would invest 2,787 in Pfizer Inc on September 1, 2024 and sell it today you would lose (166.00) from holding Pfizer Inc or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Entera Bio
Performance |
| Timeline |
| Pfizer Inc |
| Entera Bio |
Pfizer and Entera Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Entera Bio
The main advantage of trading using opposite Pfizer and Entera Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Entera Bio 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 Entera Bio will offset losses from the drop in Entera Bio's long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
| Entera Bio vs. NLS Pharmaceutics AG | Entera Bio vs. Vaccinex | Entera Bio vs. Alterity Therapeutics | Entera Bio vs. Immutep Ltd ADR |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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