Correlation Between Pfizer and Inovio Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Pfizer and Inovio Pharmaceuticals 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 Inovio Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Inovio Pharmaceuticals, you can compare the effects of market volatilities on Pfizer and Inovio Pharmaceuticals 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 Inovio Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Inovio Pharmaceuticals.
Diversification Opportunities for Pfizer and Inovio Pharmaceuticals
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and Inovio is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Inovio Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovio Pharmaceuticals 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 Inovio Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovio Pharmaceuticals has no effect on the direction of Pfizer i.e., Pfizer and Inovio Pharmaceuticals go up and down completely randomly.
Pair Corralation between Pfizer and Inovio Pharmaceuticals
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.26 times more return on investment than Inovio Pharmaceuticals. However, Pfizer Inc is 3.8 times less risky than Inovio Pharmaceuticals. It trades about -0.07 of its potential returns per unit of risk. Inovio Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest 4,663 in Pfizer Inc on August 30, 2024 and sell it today you would lose (2,080) from holding Pfizer Inc or give up 44.61% 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. Inovio Pharmaceuticals
Performance |
| Timeline |
| Pfizer Inc |
| Inovio Pharmaceuticals |
Pfizer and Inovio Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Inovio Pharmaceuticals
The main advantage of trading using opposite Pfizer and Inovio Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Inovio Pharmaceuticals 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 Inovio Pharmaceuticals will offset losses from the drop in Inovio Pharmaceuticals' long position.| Pfizer vs. Pharvaris BV | Pfizer vs. Brinker International | Pfizer vs. Alcoa Corp | Pfizer vs. Direxion Daily FTSE |
| Inovio Pharmaceuticals vs. Novavax | Inovio Pharmaceuticals vs. Vaxart Inc | Inovio Pharmaceuticals vs. Enveric Biosciences | Inovio Pharmaceuticals vs. Ocean Biomedical |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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