Correlation Between Pfizer and Carvana Co

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

Diversification Opportunities for Pfizer and Carvana Co

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Pfizer and Carvana is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Carvana Co Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana Co Cl 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 Carvana Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carvana Co Cl has no effect on the direction of Pfizer i.e., Pfizer and Carvana Co go up and down completely randomly.

Pair Corralation between Pfizer and Carvana Co

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.19 times more return on investment than Carvana Co. However, Pfizer Inc is 5.13 times less risky than Carvana Co. It trades about -0.17 of its potential returns per unit of risk. Carvana Co Cl is currently generating about -0.21 per unit of risk. If you would invest  4,927  in Pfizer Inc on July 6, 2022 and sell it today you would lose (513.00)  from holding Pfizer Inc or give up 10.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Carvana Co Cl

 Performance (%) 
       Timeline  
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

Carvana Co Cl 
Carvana Performance
0 of 100
Over the last 90 days Carvana Co Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Carvana Co is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Carvana Price Channel

Pfizer and Carvana Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Carvana Co

The main advantage of trading using opposite Pfizer and Carvana Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Carvana Co 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 Carvana Co will offset losses from the drop in Carvana Co's long position.
Pfizer vs. Amazon Inc
The idea behind Pfizer Inc and Carvana Co Cl 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.
Carvana Co 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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