Correlation Between KAUFMAN ET and Pfizer

Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KAUFMAN ET BROAD and Pfizer Inc, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Pfizer.

Diversification Opportunities for KAUFMAN ET and Pfizer

0.52

Correlation Coefficient

KAUFMAN ET  Pfizer

Very weak diversification

The 3 months correlation between KAUFMAN and Pfizer is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and Pfizer go up and down completely randomly.

Pair Corralation between KAUFMAN ET and Pfizer

Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 1.12 times more return on investment than Pfizer. However, KAUFMAN ET is 1.12 times more volatile than Pfizer Inc. It trades about 0.02 of its potential returns per unit of risk. Pfizer Inc is currently generating about 0.01 per unit of risk. If you would invest  3,140  in KAUFMAN ET BROAD on September 26, 2024 and sell it today you would earn a total of  45.00  from holding KAUFMAN ET BROAD or generate 1.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

KAUFMAN ET BROAD  vs.  Pfizer Inc

KAUFMAN ET BROAD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KAUFMAN ET BROAD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, KAUFMAN ET is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KAUFMAN ET and Pfizer

The main advantage of trading using opposite KAUFMAN ET and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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.

The idea behind KAUFMAN ET BROAD and Pfizer Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.