Correlation Between Pfizer and Farfetch

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

Diversification Opportunities for Pfizer and Farfetch

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Pfizer and Farfetch is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Farfetch Ltd Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farfetch Ltd 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 Farfetch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farfetch Ltd Cl has no effect on the direction of Pfizer i.e., Pfizer and Farfetch go up and down completely randomly.

Pair Corralation between Pfizer and Farfetch

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Farfetch. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 5.25 times less risky than Farfetch. The stock trades about -0.22 of its potential returns per unit of risk. The Farfetch Ltd Cl is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  794.00  in Farfetch Ltd Cl on June 29, 2022 and sell it today you would earn a total of  16.00  from holding Farfetch Ltd Cl or generate 2.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Farfetch Ltd 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 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 October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pfizer Price Channel

Farfetch Ltd Cl 
Farfetch Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Farfetch Ltd Cl are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Farfetch reported solid returns over the last few months and may actually be approaching a breakup point.

Farfetch Price Channel

Pfizer and Farfetch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Farfetch

The main advantage of trading using opposite Pfizer and Farfetch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Farfetch 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 Farfetch will offset losses from the drop in Farfetch's long position.
Pfizer vs. Kibush Capital Corp
The idea behind Pfizer Inc and Farfetch Ltd 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.
Farfetch vs. Clearwater Paper Corp
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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