Correlation Between Carvana Co and Pfizer

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

Diversification Opportunities for Carvana Co and Pfizer

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Carvana and Pfizer is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co Cl and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Carvana Co 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 Carvana Co Cl 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 Carvana Co i.e., Carvana Co and Pfizer go up and down completely randomly.

Pair Corralation between Carvana Co and Pfizer

Given the investment horizon of 90 days Carvana Co Cl is expected to under-perform the Pfizer. In addition to that, Carvana Co is 4.49 times more volatile than Pfizer Inc. It trades about -0.11 of its total potential returns per unit of risk. Pfizer Inc is currently generating about -0.09 per unit of volatility. If you would invest  4,585  in Pfizer Inc on July 1, 2022 and sell it today you would lose (142.00)  from holding Pfizer Inc or give up 3.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Carvana Co Cl  vs.  Pfizer Inc

 Performance (%) 
       Timeline  
Carvana Co Cl 
Carvana Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co Cl are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Carvana Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Carvana 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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pfizer Price Channel

Carvana Co and Pfizer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carvana Co and Pfizer

The main advantage of trading using opposite Carvana Co and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana Co 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.
Carvana Co vs. Amazon Inc
The idea behind Carvana Co Cl 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.
Pfizer vs. Amazon Inc
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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