Correlation Between Pfizer and Chalice Brands

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

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

Diversification Opportunities for Pfizer and Chalice Brands

0.72

Correlation Coefficient

Pfizer  Chalice Brands

Poor diversification

The 3 months correlation between Pfizer and Chalice is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Chalice Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Brands 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 Chalice Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Brands has no effect on the direction of Pfizer i.e., Pfizer and Chalice Brands go up and down completely randomly.

Pair Corralation between Pfizer and Chalice Brands

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.1 times more return on investment than Chalice Brands. However, Pfizer Inc is 10.17 times less risky than Chalice Brands. It trades about -0.16 of its potential returns per unit of risk. Chalice Brands is currently generating about -0.17 per unit of risk. If you would invest  2,961  in Pfizer Inc on September 16, 2024 and sell it today you would lose (403.00) from holding Pfizer Inc or give up 13.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Pfizer Inc  vs.  Chalice Brands

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Chalice Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pfizer and Chalice Brands

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

The idea behind Pfizer Inc and Chalice Brands 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.