Correlation Between Pfizer and CITIGROUP

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Can any of the company-specific risk be diversified away by investing in both Pfizer and CITIGROUP 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 CITIGROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and CITIGROUP FDG INC, you can compare the effects of market volatilities on Pfizer and CITIGROUP 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 CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and CITIGROUP.

Diversification Opportunities for Pfizer and CITIGROUP

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Pfizer and CITIGROUP is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and CITIGROUP FDG INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP FDG 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 CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP FDG INC has no effect on the direction of Pfizer i.e., Pfizer and CITIGROUP go up and down completely randomly.

Pair Corralation between Pfizer and CITIGROUP

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.35 times more return on investment than CITIGROUP. However, Pfizer Inc is 2.88 times less risky than CITIGROUP. It trades about -0.16 of its potential returns per unit of risk. CITIGROUP FDG INC is currently generating about -0.16 per unit of risk. If you would invest  2,787  in Pfizer Inc on September 1, 2024 and sell it today you would lose (166.00) from holding Pfizer Inc or give up 5.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy33.33%
ValuesDaily Returns

Pfizer Inc  vs.  CITIGROUP FDG INC

 Performance 
       Timeline  
Pfizer Inc 

Risk-Adjusted Performance

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Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
CITIGROUP FDG INC 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days CITIGROUP FDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Bond's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for CITIGROUP FDG INC private investors.

Pfizer and CITIGROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and CITIGROUP

The main advantage of trading using opposite Pfizer and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, CITIGROUP 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 CITIGROUP will offset losses from the drop in CITIGROUP's long position.
The idea behind Pfizer Inc and CITIGROUP FDG INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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