Correlation Between Pfizer and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Pfizer and ProShares UltraShort 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 ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and ProShares UltraShort MidCap400, you can compare the effects of market volatilities on Pfizer and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and ProShares UltraShort.
Diversification Opportunities for Pfizer and ProShares UltraShort
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and ProShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and ProShares UltraShort MidCap400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Pfizer i.e., Pfizer and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Pfizer and ProShares UltraShort
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.64 times more return on investment than ProShares UltraShort. However, Pfizer Inc is 1.57 times less risky than ProShares UltraShort. It trades about -0.04 of its potential returns per unit of risk. ProShares UltraShort MidCap400 is currently generating about -0.08 per unit of risk. If you would invest 2,846 in Pfizer Inc on September 1, 2024 and sell it today you would lose (225.00) from holding Pfizer Inc or give up 7.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Pfizer Inc vs. ProShares UltraShort MidCap400
Performance |
| Timeline |
| Pfizer Inc |
| ProShares UltraShort |
Pfizer and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and ProShares UltraShort
The main advantage of trading using opposite Pfizer and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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