Correlation Between Pfizer and Inventiva

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

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

Diversification Opportunities for Pfizer and Inventiva

-0.62

Correlation Coefficient

Pfizer  Inventiva

Excellent diversification

The 3 months correlation between Pfizer and Inventiva is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Inventiva Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventiva Sa 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 Inventiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventiva Sa has no effect on the direction of Pfizer i.e., Pfizer and Inventiva go up and down completely randomly.

Pair Corralation between Pfizer and Inventiva

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Inventiva. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 2.12 times less risky than Inventiva. The stock trades about -0.19 of its potential returns per unit of risk. The Inventiva Sa is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  267.00  in Inventiva Sa on September 13, 2024 and sell it today you would lose (8.00) from holding Inventiva Sa or give up 3.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Pfizer Inc  vs.  Inventiva Sa

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 abnormal 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.

Inventiva Sa

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inventiva Sa are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Inventiva sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Inventiva

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

The idea behind Pfizer Inc and Inventiva Sa 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.