Correlation Between Pfizer and Allergan Plc

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Pfizer and Allergan Plc 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 Allergan Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Allergan Plc, you can compare the effects of market volatilities on Pfizer and Allergan Plc 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 Allergan Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Allergan Plc.

Diversification Opportunities for Pfizer and Allergan Plc

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Pfizer and Allergan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Allergan Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allergan Plc 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 Allergan Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allergan Plc has no effect on the direction of Pfizer i.e., Pfizer and Allergan Plc go up and down completely randomly.

Pair Corralation between Pfizer and Allergan Plc

If you would invest  2,704  in Pfizer Inc on December 30, 2023 and sell it today you would earn a total of  71.00  from holding Pfizer Inc or generate 2.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Pfizer Inc  vs.  Allergan Plc

 Performance 
       Timeline  
Pfizer Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
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 current stock price tumult, may contribute to shorter-term losses for the shareholders.
Allergan Plc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Allergan Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Allergan Plc is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pfizer and Allergan Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Allergan Plc

The main advantage of trading using opposite Pfizer and Allergan Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Allergan Plc 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 Allergan Plc will offset losses from the drop in Allergan Plc's long position.
The idea behind Pfizer Inc and Allergan Plc 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 the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

Other Complementary Tools

Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes