Correlation Between Pfizer and Exxon
Can any of the company-specific risk be diversified away by investing in both Pfizer and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Exxon Mobil Corp, you can compare the effects of market volatilities on Pfizer and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Exxon.
Diversification Opportunities for Pfizer and Exxon
Very good diversification
The 3 months correlation between Pfizer and Exxon is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Pfizer i.e., Pfizer and Exxon go up and down completely randomly.
Pair Corralation between Pfizer and Exxon
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Exxon. In addition to that, Pfizer is 1.07 times more volatile than Exxon Mobil Corp. It trades about -0.04 of its total potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.04 per unit of volatility. If you would invest 11,094 in Exxon Mobil Corp on September 5, 2024 and sell it today you would earn a total of 673.00 from holding Exxon Mobil Corp or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Exxon Mobil Corp
Performance |
| Timeline |
| Pfizer Inc |
| Exxon Mobil Corp |
Pfizer and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Exxon
The main advantage of trading using opposite Pfizer and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
| Exxon vs. Shell PLC ADR | Exxon vs. TotalEnergies SE ADR | Exxon vs. Equinor ASA ADR | Exxon vs. Petrleo Brasileiro SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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