Correlation Between TERADATA and Pfizer

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

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

Diversification Opportunities for TERADATA and Pfizer

-0.26

Correlation Coefficient

TERADATA  Pfizer

Very good diversification

The 3 months correlation between TERADATA and Pfizer is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding TERADATA and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and TERADATA 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 TERADATA 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 TERADATA i.e., TERADATA and Pfizer go up and down completely randomly.

Pair Corralation between TERADATA and Pfizer

Assuming the 90 days trading horizon TERADATA is expected to generate 0.84 times more return on investment than Pfizer. However, TERADATA is 1.19 times less risky than Pfizer. It trades about 0.22 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.04 per unit of risk. If you would invest  2,580  in TERADATA on September 19, 2024 and sell it today you would earn a total of  520.00  from holding TERADATA or generate 20.16% return on investment over 90 days.

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

TERADATA  vs.  Pfizer Inc

TERADATA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TERADATA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TERADATA unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TERADATA and Pfizer

The main advantage of trading using opposite TERADATA and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TERADATA 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 TERADATA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.