Correlation Between Pfizer and ARK Autonomous

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

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

Diversification Opportunities for Pfizer and ARK Autonomous

-0.8

Correlation Coefficient

Pfizer  ARK Autonomous

Pay attention - limited upside

The 3 months correlation between Pfizer and ARK is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and ARK Autonomous Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Autonomous Technology 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 ARK Autonomous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Autonomous Technology has no effect on the direction of Pfizer i.e., Pfizer and ARK Autonomous go up and down completely randomly.

Pair Corralation between Pfizer and ARK Autonomous

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the ARK Autonomous. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.15 times less risky than ARK Autonomous. The stock trades about -0.1 of its potential returns per unit of risk. The ARK Autonomous Technology is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  5,623  in ARK Autonomous Technology on August 30, 2024 and sell it today you would earn a total of  1,824  from holding ARK Autonomous Technology or generate 32.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Pfizer Inc  vs.  ARK Autonomous Technology

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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ARK Autonomous Technology

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Autonomous Technology are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, ARK Autonomous reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and ARK Autonomous

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

The idea behind Pfizer Inc and ARK Autonomous Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.