Correlation Between Urban Outfitters and Pfizer

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

Diversification Opportunities for Urban Outfitters and Pfizer

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Urban and Pfizer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters i.e., Urban Outfitters and Pfizer go up and down completely randomly.

Pair Corralation between Urban Outfitters and Pfizer

Given the investment horizon of 90 days Urban Outfitters is expected to generate 2.94 times more return on investment than Pfizer. However, Urban Outfitters is 2.94 times more volatile than Pfizer Inc. It trades about 0.35 of its potential returns per unit of risk. Pfizer Inc is currently generating about 0.36 per unit of risk. If you would invest  2,298  in Urban Outfitters on September 4, 2022 and sell it today you would earn a total of  655.00  from holding Urban Outfitters or generate 28.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Urban Outfitters  vs.  Pfizer Inc

 Performance (%) 
       Timeline  
Urban Outfitters 
Urban Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Urban Outfitters disclosed solid returns over the last few months and may actually be approaching a breakup point.

Urban Price Channel

Pfizer Inc 
Pfizer Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Pfizer Price Channel

Urban Outfitters and Pfizer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Urban Outfitters and Pfizer

The main advantage of trading using opposite Urban Outfitters and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters 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.
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The idea behind Urban Outfitters 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.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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