Correlation Between Pfizer and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Pfizer and Lumen Technologies 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 Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Lumen Technologies, you can compare the effects of market volatilities on Pfizer and Lumen Technologies 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 Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Lumen Technologies.
Diversification Opportunities for Pfizer and Lumen Technologies
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and Lumen is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies 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 Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of Pfizer i.e., Pfizer and Lumen Technologies go up and down completely randomly.
Pair Corralation between Pfizer and Lumen Technologies
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Lumen Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 3.48 times less risky than Lumen Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Lumen Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 639.00 in Lumen Technologies on September 1, 2024 and sell it today you would earn a total of 95.00 from holding Lumen Technologies or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Lumen Technologies
Performance |
| Timeline |
| Pfizer Inc |
| Lumen Technologies |
Pfizer and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Lumen Technologies
The main advantage of trading using opposite Pfizer and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Lumen Technologies 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 Lumen Technologies will offset losses from the drop in Lumen Technologies' long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
| Lumen Technologies vs. Verizon Communications | Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. ATT Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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