Correlation Between Pfizer and Touchmark Bancshares

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

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

Diversification Opportunities for Pfizer and Touchmark Bancshares

0.89

Correlation Coefficient

Pfizer  Touchmark Bancshares

Very poor diversification

The 3 months correlation between Pfizer and Touchmark is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Touchmark Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchmark Bancshares 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 Touchmark Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchmark Bancshares has no effect on the direction of Pfizer i.e., Pfizer and Touchmark Bancshares go up and down completely randomly.

Pair Corralation between Pfizer and Touchmark Bancshares

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Touchmark Bancshares. In addition to that, Pfizer is 1.0 times more volatile than Touchmark Bancshares. It trades about -0.16 of its total potential returns per unit of risk. Touchmark Bancshares is currently generating about -0.12 per unit of volatility. If you would invest  904.00  in Touchmark Bancshares on September 18, 2024 and sell it today you would lose (97.00) from holding Touchmark Bancshares or give up 10.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Pfizer Inc  vs.  Touchmark Bancshares

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 uncertain 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.

Touchmark Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchmark Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Pfizer and Touchmark Bancshares

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

The idea behind Pfizer Inc and Touchmark Bancshares 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.