Correlation Between Pfizer and Fidelity Focused

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

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

Diversification Opportunities for Pfizer and Fidelity Focused

-0.54

Correlation Coefficient

Pfizer  Fidelity Focused

Excellent diversification

The 3 months correlation between Pfizer and Fidelity is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Fidelity Focused Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Focused Stock 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 Fidelity Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Focused Stock has no effect on the direction of Pfizer i.e., Pfizer and Fidelity Focused go up and down completely randomly.

Pair Corralation between Pfizer and Fidelity Focused

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Fidelity Focused. In addition to that, Pfizer is 1.45 times more volatile than Fidelity Focused Stock. It trades about -0.06 of its total potential returns per unit of risk. Fidelity Focused Stock is currently generating about 0.2 per unit of volatility. If you would invest  3,813  in Fidelity Focused Stock on September 3, 2024 and sell it today you would earn a total of  502.00  from holding Fidelity Focused Stock or generate 13.17% return on investment over 90 days.

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

Pfizer Inc  vs.  Fidelity Focused Stock

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 rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Focused Stock

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Focused Stock are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Focused may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pfizer and Fidelity Focused

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

The idea behind Pfizer Inc and Fidelity Focused Stock 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.