Correlation Between Pfizer and PTC Therapeutics
Can any of the company-specific risk be diversified away by investing in both Pfizer and PTC Therapeutics 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 PTC Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and PTC Therapeutics, you can compare the effects of market volatilities on Pfizer and PTC Therapeutics 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 PTC Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and PTC Therapeutics.
Diversification Opportunities for Pfizer and PTC Therapeutics
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and PTC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and PTC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Therapeutics 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 PTC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Therapeutics has no effect on the direction of Pfizer i.e., Pfizer and PTC Therapeutics go up and down completely randomly.
Pair Corralation between Pfizer and PTC Therapeutics
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the PTC Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 2.39 times less risky than PTC Therapeutics. The stock trades about -0.14 of its potential returns per unit of risk. The PTC Therapeutics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,252 in PTC Therapeutics on August 27, 2024 and sell it today you would earn a total of 1,071 from holding PTC Therapeutics or generate 32.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. PTC Therapeutics
Performance |
| Timeline |
| Pfizer Inc |
| PTC Therapeutics |
Pfizer and PTC Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and PTC Therapeutics
The main advantage of trading using opposite Pfizer and PTC Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, PTC Therapeutics 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 PTC Therapeutics will offset losses from the drop in PTC Therapeutics' long position.| Pfizer vs. Capricor Therapeutics | Pfizer vs. Soleno Therapeutics | Pfizer vs. Bio Path Holdings | Pfizer vs. Moleculin Biotech |
| PTC Therapeutics vs. Krystal Biotech | PTC Therapeutics vs. Sarepta Therapeutics | PTC Therapeutics vs. Iovance Biotherapeutics | PTC Therapeutics vs. Madrigal Pharmaceuticals |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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