Correlation Between Pfizer and VersaBank

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

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

Diversification Opportunities for Pfizer and VersaBank

-0.13

Correlation Coefficient

Pfizer  VersaBank

Good diversification

The 3 months correlation between Pfizer and VersaBank is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Pfizer i.e., Pfizer and VersaBank go up and down completely randomly.

Pair Corralation between Pfizer and VersaBank

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the VersaBank. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 2.24 times less risky than VersaBank. The stock trades about -0.03 of its potential returns per unit of risk. The VersaBank is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  963.00  in VersaBank on March 28, 2024 and sell it today you would earn a total of  109.00  from holding VersaBank or generate 11.32% return on investment over 90 days.

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

Pfizer Inc  vs.  VersaBank

Pfizer Inc

Risk-Adjusted Performance

2 of 100

Weak

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

VersaBank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VersaBank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, VersaBank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pfizer and VersaBank

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

The idea behind Pfizer Inc and VersaBank 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.