Correlation Between Long-Term Govt and Pfizer

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

Diversification Opportunities for Long-Term Govt and Pfizer

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Long-Term and Pfizer is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Long-Term Govt Bond and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Long-Term Govt 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 Long-Term Govt Bond 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 Long-Term Govt i.e., Long-Term Govt and Pfizer go up and down completely randomly.

Pair Corralation between Long-Term Govt and Pfizer

Given the investment horizon of 90 days Long-Term Govt Bond is expected to generate 0.78 times more return on investment than Pfizer. However, Long-Term Govt Bond is 1.28 times less risky than Pfizer. It trades about -0.24 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.21 per unit of risk. If you would invest  7,185  in Long-Term Govt Bond on June 29, 2022 and sell it today you would lose (829.00)  from holding Long-Term Govt Bond or give up 11.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Long-Term Govt Bond  vs.  Pfizer Inc

 Performance (%) 
       Timeline  
Long-Term Govt Bond 
Long-Term Performance
0 of 100
Over the last 90 days Long-Term Govt Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Etf's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Long-Term Price Channel

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

Long-Term Govt and Pfizer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Long-Term Govt and Pfizer

The main advantage of trading using opposite Long-Term Govt and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long-Term Govt 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.
Long-Term Govt vs. Exxon Mobil Corp
The idea behind Long-Term Govt Bond 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. Kibush Capital 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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