Correlation Between Pfizer and CES Energy
Can any of the company-specific risk be diversified away by investing in both Pfizer and CES Energy 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 CES Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and CES Energy Solutions, you can compare the effects of market volatilities on Pfizer and CES Energy 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 CES Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and CES Energy.
Diversification Opportunities for Pfizer and CES Energy
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and CES is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions 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 CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of Pfizer i.e., Pfizer and CES Energy go up and down completely randomly.
Pair Corralation between Pfizer and CES Energy
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the CES Energy. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.85 times less risky than CES Energy. The stock trades about -0.13 of its potential returns per unit of risk. The CES Energy Solutions is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 531.00 in CES Energy Solutions on September 13, 2024 and sell it today you would earn a total of 150.00 from holding CES Energy Solutions or generate 28.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pfizer Inc vs. CES Energy Solutions
Performance |
Timeline |
Pfizer Inc |
CES Energy Solutions |
Pfizer and CES Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pfizer and CES Energy
The main advantage of trading using opposite Pfizer and CES Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, CES Energy 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 CES Energy will offset losses from the drop in CES Energy's long position.Pfizer vs. AbbVie Inc | Pfizer vs. Merck Company | Pfizer vs. Eli Lilly and | Pfizer vs. Bristol Myers Squibb |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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