Correlation Between Pfizer and ESGEN Acquisition

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

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

Diversification Opportunities for Pfizer and ESGEN Acquisition

-0.6

Correlation Coefficient

Pfizer  ESGEN Acquisition

Excellent diversification

The 3 months correlation between Pfizer and ESGEN is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and ESGEN Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGEN Acquisition Corp 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 ESGEN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGEN Acquisition Corp has no effect on the direction of Pfizer i.e., Pfizer and ESGEN Acquisition go up and down completely randomly.

Pair Corralation between Pfizer and ESGEN Acquisition

If you would invest  1,095  in ESGEN Acquisition Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding ESGEN Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Pfizer Inc  vs.  ESGEN Acquisition Corp

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.

ESGEN Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESGEN Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ESGEN Acquisition is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pfizer and ESGEN Acquisition

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

The idea behind Pfizer Inc and ESGEN Acquisition Corp 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.