Correlation Between Optimum Fixed and Pfizer

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

Diversification Opportunities for Optimum Fixed and Pfizer

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Optimum and Pfizer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Fixed Income and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Optimum Fixed 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 Optimum Fixed Income 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 Optimum Fixed i.e., Optimum Fixed and Pfizer go up and down completely randomly.

Pair Corralation between Optimum Fixed and Pfizer

If you would invest  3,505  in Pfizer Inc on July 3, 2022 and sell it today you would earn a total of  871.00  from holding Pfizer Inc or generate 24.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.21%
ValuesDaily Returns

Optimum Fixed Income  vs.  Pfizer Inc

 Performance (%) 
       Timeline  
Optimum Fixed Income 
Optimum Performance
0 of 100
Over the last 90 days Optimum Fixed Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Optimum Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
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 November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pfizer Price Channel

Optimum Fixed and Pfizer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Optimum Fixed and Pfizer

The main advantage of trading using opposite Optimum Fixed and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Fixed 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 effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Optimum Fixed as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Optimum Fixed's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Optimum Fixed's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Optimum Fixed Income.
The idea behind Optimum Fixed Income 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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