Correlation Between Pfizer and Latch
Can any of the company-specific risk be diversified away by investing in both Pfizer and Latch 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 Latch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Latch Inc, you can compare the effects of market volatilities on Pfizer and Latch 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 Latch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Latch.
Diversification Opportunities for Pfizer and Latch
Pay attention - limited upside
The 3 months correlation between Pfizer and Latch is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Latch Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latch Inc 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 Latch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latch Inc has no effect on the direction of Pfizer i.e., Pfizer and Latch go up and down completely randomly.
Pair Corralation between Pfizer and Latch
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Latch. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 13.37 times less risky than Latch. The stock trades about -0.05 of its potential returns per unit of risk. The Latch Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Latch Inc on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Latch Inc or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 8.29% |
| Values | Daily Returns |
Pfizer Inc vs. Latch Inc
Performance |
| Timeline |
| Pfizer Inc |
| Latch Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Pfizer and Latch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Latch
The main advantage of trading using opposite Pfizer and Latch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Latch 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 Latch will offset losses from the drop in Latch's long position.| Pfizer vs. Johnson Johnson | Pfizer vs. RLJ Lodging Trust | Pfizer vs. Aquagold International | Pfizer vs. Stepstone Group |
| Latch vs. Albertsons Companies | Latch vs. Barrick Gold Corp | Latch vs. NioCorp Developments Ltd | Latch vs. Mangazeya Mining |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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