Correlation Between Pfizer and Health Care
Can any of the company-specific risk be diversified away by investing in both Pfizer and Health Care 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 Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Health Care Select, you can compare the effects of market volatilities on Pfizer and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Health Care.
Diversification Opportunities for Pfizer and Health Care
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pfizer and Health is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Pfizer i.e., Pfizer and Health Care go up and down completely randomly.
Pair Corralation between Pfizer and Health Care
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Health Care. In addition to that, Pfizer is 1.84 times more volatile than Health Care Select. It trades about -0.37 of its total potential returns per unit of risk. Health Care Select is currently generating about -0.24 per unit of volatility. If you would invest 15,040 in Health Care Select on August 24, 2024 and sell it today you would lose (637.00) from holding Health Care Select or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Health Care Select
Performance |
| Timeline |
| Pfizer Inc |
| Health Care Select |
Pfizer and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Health Care
The main advantage of trading using opposite Pfizer and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Pfizer vs. Johnson Johnson | Pfizer vs. Small Cap Core | Pfizer vs. Freedom Holding Corp | Pfizer vs. Gfl Environmental Holdings |
| Health Care vs. Consumer Staples Select | Health Care vs. Industrial Select Sector | Health Care vs. Consumer Discretionary Select | Health Care 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |