Correlation Between Pfizer and Rover

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

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

Diversification Opportunities for Pfizer and Rover

-0.76

Correlation Coefficient

Pfizer  Rover

Pay attention - limited upside

The 3 months correlation between Pfizer and Rover is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Rover Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rover Group 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 Rover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rover Group has no effect on the direction of Pfizer i.e., Pfizer and Rover go up and down completely randomly.

Pair Corralation between Pfizer and Rover

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Rover. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 2.04 times less risky than Rover. The stock trades about -0.07 of its potential returns per unit of risk. The Rover Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Rover Group on September 19, 2024 and sell it today you would earn a total of  162.00  from holding Rover Group or generate 45.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.63%
Values	Daily Returns

Pfizer Inc  vs.  Rover Group

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 uncertain 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.

Rover Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rover Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Rover is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Pfizer and Rover

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

The idea behind Pfizer Inc and Rover Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.