Correlation Between Pfizer and Nationwide
Can any of the company-specific risk be diversified away by investing in both Pfizer and Nationwide 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 Nationwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Nationwide, you can compare the effects of market volatilities on Pfizer and Nationwide 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 Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Nationwide.
Diversification Opportunities for Pfizer and Nationwide
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and Nationwide is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Nationwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide 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 Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide has no effect on the direction of Pfizer i.e., Pfizer and Nationwide go up and down completely randomly.
Pair Corralation between Pfizer and Nationwide
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Nationwide. In addition to that, Pfizer is 2.32 times more volatile than Nationwide. It trades about -0.07 of its total potential returns per unit of risk. Nationwide is currently generating about 0.07 per unit of volatility. If you would invest 1,945 in Nationwide on August 30, 2024 and sell it today you would earn a total of 132.00 from holding Nationwide or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.05% |
| Values | Daily Returns |
Pfizer Inc vs. Nationwide
Performance |
| Timeline |
| Pfizer Inc |
| Nationwide |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Pfizer and Nationwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Nationwide
The main advantage of trading using opposite Pfizer and Nationwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Nationwide 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 Nationwide will offset losses from the drop in Nationwide's long position.| Pfizer vs. Emergent Biosolutions | Pfizer vs. Bausch Health Companies | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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