Correlation Between Apple and Pfizer

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Can any of the company-specific risk be diversified away by investing in both Apple and Pfizer 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 Apple and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Pfizer Inc, you can compare the effects of market volatilities on Apple and Pfizer 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 Apple with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Pfizer.

Diversification Opportunities for Apple and Pfizer

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Apple and Pfizer is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Apple 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 Apple Inc are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Apple i.e., Apple and Pfizer go up and down completely randomly.

Pair Corralation between Apple and Pfizer

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Pfizer. In addition to that, Apple is 1.29 times more volatile than Pfizer Inc. It trades about -0.06 of its total potential returns per unit of risk. Pfizer Inc is currently generating about 0.08 per unit of volatility. If you would invest  4,656  in Pfizer Inc on March 28, 2022 and sell it today you would earn a total of  503.00  from holding Pfizer Inc or generate 10.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Pfizer Inc

 Performance (%) 
      Timeline 
Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in July 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.007
Payout Ratio
0.14
Last Split Factor
4:1
Forward Annual Dividend Rate
0.92
Dividend Date
2022-05-12
Ex Dividend Date
2022-05-06
Last Split Date
2020-08-31

Apple Price Channel

Pfizer Inc 
Pfizer Performance
0 of 100
Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in July 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0319
Payout Ratio
0.31
Last Split Factor
1054:1000
Forward Annual Dividend Rate
1.6
Dividend Date
2022-06-10
Ex Dividend Date
2022-07-28
Last Split Date
2020-11-17

Pfizer Price Channel

Apple and Pfizer Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Apple and Pfizer

The main advantage of trading using opposite Apple and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.
The idea behind Apple Inc and Pfizer Inc 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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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