Correlation Between United States and Pfizer
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Pfizer Inc, you can compare the effects of market volatilities on United States 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 United States with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Pfizer.
Diversification Opportunities for United States and Pfizer
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Pfizer is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and United States 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 United States Steel 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 United States i.e., United States and Pfizer go up and down completely randomly.
Pair Corralation between United States and Pfizer
Given the investment horizon of 90 days United States Steel is expected to generate 2.36 times more return on investment than Pfizer. However, United States is 2.36 times more volatile than Pfizer Inc. It trades about 0.19 of its potential returns per unit of risk. Pfizer Inc is currently generating about 0.04 per unit of risk. If you would invest 1,287,500 in United States Steel on November 2, 2024 and sell it today you would earn a total of 145,000 from holding United States Steel or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Pfizer Inc
Performance |
| Timeline |
| United States Steel |
| Pfizer Inc |
United States and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Pfizer
The main advantage of trading using opposite United States and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Boldt SA | United States vs. Agrometal SAI | United States vs. Capex SA | United States vs. Pfizer Inc |
| Pfizer vs. Telecom Argentina | Pfizer vs. Harmony Gold Mining | Pfizer vs. Transportadora de Gas | Pfizer vs. Agrometal SAI |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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