Correlation Between Pfizer and Alger Capital

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

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

Diversification Opportunities for Pfizer and Alger Capital

-0.77

Correlation Coefficient

Pfizer  Alger Capital

Pay attention - limited upside

The 3 months correlation between Pfizer and Alger is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Pfizer 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 Pfizer Inc are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Pfizer i.e., Pfizer and Alger Capital go up and down completely randomly.

Pair Corralation between Pfizer and Alger Capital

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Alger Capital. In addition to that, Pfizer is 1.26 times more volatile than Alger Capital Appreciation. It trades about -0.1 of its total potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.31 per unit of volatility. If you would invest  6,746  in Alger Capital Appreciation on September 5, 2024 and sell it today you would earn a total of  1,688  from holding Alger Capital Appreciation or generate 25.02% return on investment over 90 days.

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

Pfizer Inc  vs.  Alger Capital Appreciation

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 weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alger Capital Apprec

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Capital Appreciation are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Alger Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Alger Capital

The main advantage of trading using opposite Pfizer and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Alger Capital 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 Alger Capital will offset losses from the drop in Alger Capital's long position.

The idea behind Pfizer Inc and Alger Capital Appreciation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.