Correlation Between Biogen and Pfizer

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

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

Diversification Opportunities for Biogen and Pfizer

0.87

Correlation Coefficient

Biogen  Pfizer

Very poor diversification

The 3 months correlation between Biogen and Pfizer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Biogen 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 Biogen Inc 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 Biogen i.e., Biogen and Pfizer go up and down completely randomly.

Pair Corralation between Biogen and Pfizer

Assuming the 90 days trading horizon Biogen Inc is expected to under-perform the Pfizer. But the stock apears to be less risky and, when comparing its historical volatility, Biogen Inc is 1.06 times less risky than Pfizer. The stock trades about -0.1 of its potential returns per unit of risk. The Pfizer Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,350  in Pfizer Inc on September 17, 2024 and sell it today you would earn a total of  82.00  from holding Pfizer Inc or generate 3.49% return on investment over 90 days.

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

Biogen Inc  vs.  Pfizer Inc

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Biogen and Pfizer

The main advantage of trading using opposite Biogen and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen 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 Biogen Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.