Correlation Between Pfizer and Disney

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

Diversification Opportunities for Pfizer and Disney

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Pfizer and Disney is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Pfizer i.e., Pfizer and Disney go up and down completely randomly.

Pair Corralation between Pfizer and Disney

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Disney. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 2.13 times less risky than Disney. The stock trades about -0.24 of its potential returns per unit of risk. The Walt Disney is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  9,364  in Walt Disney on May 11, 2022 and sell it today you would earn a total of  1,449  from holding Walt Disney or generate 15.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Walt Disney

 Performance (%) 
       Timeline  
Pfizer Inc 
Pfizer Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pfizer Price Channel

Walt Disney 
Disney Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Disney is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Disney Price Channel

Pfizer and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Disney

The main advantage of trading using opposite Pfizer and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
The idea behind Pfizer Inc and Walt Disney 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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