Correlation Between Pfizer and Energy Select
Can any of the company-specific risk be diversified away by investing in both Pfizer and Energy Select 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 Energy Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Energy Select Sector, you can compare the effects of market volatilities on Pfizer and Energy Select 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 Energy Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Energy Select.
Diversification Opportunities for Pfizer and Energy Select
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and Energy is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Energy Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Select Sector 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 Energy Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Select Sector has no effect on the direction of Pfizer i.e., Pfizer and Energy Select go up and down completely randomly.
Pair Corralation between Pfizer and Energy Select
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Energy Select. In addition to that, Pfizer is 1.1 times more volatile than Energy Select Sector. It trades about -0.08 of its total potential returns per unit of risk. Energy Select Sector is currently generating about 0.03 per unit of volatility. If you would invest 8,413 in Energy Select Sector on August 23, 2024 and sell it today you would earn a total of 1,299 from holding Energy Select Sector or generate 15.44% 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. Energy Select Sector
Performance |
| Timeline |
| Pfizer Inc |
| Energy Select Sector |
Pfizer and Energy Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Energy Select
The main advantage of trading using opposite Pfizer and Energy Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Energy Select 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 Energy Select will offset losses from the drop in Energy Select's long position.| Pfizer vs. Johnson Johnson | Pfizer vs. Small Cap Core | Pfizer vs. Freedom Holding Corp | Pfizer vs. Gfl Environmental Holdings |
| Energy Select vs. Financial Select Sector | Energy Select vs. Health Care Select | Energy Select vs. Technology Select Sector | Energy Select vs. Utilities Select Sector |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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