Correlation Between Pfizer and Us Government

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

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

Diversification Opportunities for Pfizer and Us Government

0.7

Correlation Coefficient

Pfizer  Us Government

Poor diversification

The 3 months correlation between Pfizer and RGVFX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Pfizer i.e., Pfizer and Us Government go up and down completely randomly.

Pair Corralation between Pfizer and Us Government

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Us Government. In addition to that, Pfizer is 3.72 times more volatile than Us Government Securities. It trades about -0.05 of its total potential returns per unit of risk. Us Government Securities is currently generating about 0.04 per unit of volatility. If you would invest  1,141  in Us Government Securities on September 12, 2024 and sell it today you would earn a total of  55.00  from holding Us Government Securities or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.72%
Values	Daily Returns

Pfizer Inc  vs.  Us Government Securities

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.

Us Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Us Government Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Us Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and Us Government

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

The idea behind Pfizer Inc and Us Government Securities 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 Commodity Directory module to find actively traded commodities issued by global exchanges.