Correlation Between Pfizer and Hennessy
Can any of the company-specific risk be diversified away by investing in both Pfizer and Hennessy 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 Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Hennessy Bp Energy, you can compare the effects of market volatilities on Pfizer and Hennessy 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 Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Hennessy.
Diversification Opportunities for Pfizer and Hennessy
Good diversification
The 3 months correlation between Pfizer and Hennessy is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Hennessy Bp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp 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 Hennessy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Bp Energy has no effect on the direction of Pfizer i.e., Pfizer and Hennessy go up and down completely randomly.
Pair Corralation between Pfizer and Hennessy
Considering the 90-day investment horizon Pfizer Inc is expected to generate 1.15 times more return on investment than Hennessy. However, Pfizer is 1.15 times more volatile than Hennessy Bp Energy. It trades about -0.04 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about -0.14 per unit of risk. If you would invest 2,587 in Pfizer Inc on November 18, 2024 and sell it today you would lose (34.00) from holding Pfizer Inc or give up 1.31% 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. Hennessy Bp Energy
Performance |
| Timeline |
| Pfizer Inc |
| Hennessy Bp Energy |
Pfizer and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Hennessy
The main advantage of trading using opposite Pfizer and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Hennessy 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 Hennessy will offset losses from the drop in Hennessy's long position.The idea behind Pfizer Inc and Hennessy Bp Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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