Correlation Between Ternium SA and Pfizer
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Pfizer 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 Ternium SA and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA DRC and Pfizer Inc, you can compare the effects of market volatilities on Ternium SA and Pfizer 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 Ternium SA with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Pfizer.
Diversification Opportunities for Ternium SA and Pfizer
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ternium and Pfizer is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA DRC and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Ternium SA 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 Ternium SA DRC are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Ternium SA i.e., Ternium SA and Pfizer go up and down completely randomly.
Pair Corralation between Ternium SA and Pfizer
Assuming the 90 days trading horizon Ternium SA DRC is expected to generate 1.0 times more return on investment than Pfizer. However, Ternium SA DRC is 1.0 times less risky than Pfizer. It trades about 0.03 of its potential returns per unit of risk. Pfizer Inc is currently generating about 0.02 per unit of risk. If you would invest 824,650 in Ternium SA DRC on November 30, 2024 and sell it today you would earn a total of 63,350 from holding Ternium SA DRC or generate 7.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ternium SA DRC vs. Pfizer Inc
Performance |
Timeline |
Ternium SA DRC |
Pfizer Inc |
Ternium SA and Pfizer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ternium SA and Pfizer
The main advantage of trading using opposite Ternium SA and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.Ternium SA vs. Transportadora de Gas | ||
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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