Correlation Between Intel and Pfizer
Can any of the company-specific risk be diversified away by investing in both Intel 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 Intel and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Pfizer Inc, you can compare the effects of market volatilities on Intel 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 Intel with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Pfizer.
Diversification Opportunities for Intel and Pfizer
Poor diversification
The 3 months correlation between Intel and Pfizer is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Intel 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 Intel 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 Intel i.e., Intel and Pfizer go up and down completely randomly.
Pair Corralation between Intel and Pfizer
Given the investment horizon of 90 days Intel is expected to under-perform the Pfizer. In addition to that, Intel is 2.27 times more volatile than Pfizer Inc. It trades about -0.52 of its total potential returns per unit of risk. Pfizer Inc is currently generating about -0.31 per unit of volatility. If you would invest 2,772 in Pfizer Inc on January 30, 2024 and sell it today you would lose (232.00) from holding Pfizer Inc or give up 8.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Intel vs. Pfizer Inc
Performance |
Timeline |
Intel |
Pfizer Inc |
Intel and Pfizer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Intel and Pfizer
The main advantage of trading using opposite Intel and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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.Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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