Correlation Between Pfizer and Envirotech Vehicles

Can any of the company-specific risk be diversified away by investing in both Pfizer and Envirotech Vehicles 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 Envirotech Vehicles into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pfizer Inc and Envirotech Vehicles, you can compare the effects of market volatilities on Pfizer and Envirotech Vehicles 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 Envirotech Vehicles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Envirotech Vehicles.

Diversification Opportunities for Pfizer and Envirotech Vehicles

0.02

Correlation Coefficient

Pfizer  Envirotech Vehicles

Significant diversification

The 3 months correlation between Pfizer and Envirotech is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Envirotech Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envirotech Vehicles 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 Envirotech Vehicles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envirotech Vehicles has no effect on the direction of Pfizer i.e., Pfizer and Envirotech Vehicles go up and down completely randomly.

Pair Corralation between Pfizer and Envirotech Vehicles

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Envirotech Vehicles. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 4.32 times less risky than Envirotech Vehicles. The stock trades about -0.07 of its potential returns per unit of risk. The Envirotech Vehicles is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  514.00  in Envirotech Vehicles on February 11, 2024 and sell it today you would lose (293.00) from holding Envirotech Vehicles or give up 57.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pfizer Inc  vs.  Envirotech Vehicles

Pfizer Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Envirotech Vehicles

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Envirotech Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Envirotech Vehicles is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pfizer and Envirotech Vehicles

The main advantage of trading using opposite Pfizer and Envirotech Vehicles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Envirotech Vehicles 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 Envirotech Vehicles will offset losses from the drop in Envirotech Vehicles' long position.

The idea behind Pfizer Inc and Envirotech Vehicles 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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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.