Correlation Between Pfizer and Wesdome Gold

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

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

Diversification Opportunities for Pfizer and Wesdome Gold

0.77

Correlation Coefficient

Pfizer  Wesdome Gold

Poor diversification

The 3 months correlation between Pfizer and Wesdome is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Wesdome Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesdome Gold Mines 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 Wesdome Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesdome Gold Mines has no effect on the direction of Pfizer i.e., Pfizer and Wesdome Gold go up and down completely randomly.

Pair Corralation between Pfizer and Wesdome Gold

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Wesdome Gold. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.76 times less risky than Wesdome Gold. The stock trades about -0.08 of its potential returns per unit of risk. The Wesdome Gold Mines is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  919.00  in Wesdome Gold Mines on September 4, 2024 and sell it today you would lose (50.00) from holding Wesdome Gold Mines or give up 5.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Pfizer Inc  vs.  Wesdome Gold Mines

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.

Wesdome Gold Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wesdome Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Wesdome Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pfizer and Wesdome Gold

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

The idea behind Pfizer Inc and Wesdome Gold Mines 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..