Correlation Between Vmware and Pfizer

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

Diversification Opportunities for Vmware and Pfizer

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Vmware and Pfizer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vmware Inc and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Vmware 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 Vmware Inc 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 Vmware i.e., Vmware and Pfizer go up and down completely randomly.

Pair Corralation between Vmware and Pfizer

Considering the 90-day investment horizon Vmware Inc is expected to under-perform the Pfizer. But the stock apears to be less risky and, when comparing its historical volatility, Vmware Inc is 1.19 times less risky than Pfizer. The stock trades about -0.14 of its potential returns per unit of risk. The Pfizer Inc is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  5,399  in Pfizer Inc on March 27, 2022 and sell it today you would lose (240.00)  from holding Pfizer Inc or give up 4.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Vmware Inc  vs.  Pfizer Inc

 Performance (%) 
      Timeline 
Vmware Inc 
Vmware Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vmware Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, Vmware is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Structure and Payout Changes

Payout Ratio
0.0405
Dividend Date
2021-11-01
Ex Dividend Date
2021-11-02

Vmware 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 rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0319
Payout Ratio
0.31
Last Split Factor
1054:1000
Forward Annual Dividend Rate
1.6
Dividend Date
2022-06-10
Ex Dividend Date
2022-07-28
Last Split Date
2020-11-17

Pfizer Price Channel

Vmware and Pfizer Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Vmware and Pfizer

The main advantage of trading using opposite Vmware and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vmware 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.
The idea behind Vmware Inc 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.
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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