Correlation Between Pfizer and Bolt Biotherapeutics
Can any of the company-specific risk be diversified away by investing in both Pfizer and Bolt Biotherapeutics 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 Bolt Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Bolt Biotherapeutics, you can compare the effects of market volatilities on Pfizer and Bolt Biotherapeutics 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 Bolt Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Bolt Biotherapeutics.
Diversification Opportunities for Pfizer and Bolt Biotherapeutics
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pfizer and Bolt is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics 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 Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of Pfizer i.e., Pfizer and Bolt Biotherapeutics go up and down completely randomly.
Pair Corralation between Pfizer and Bolt Biotherapeutics
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.37 times more return on investment than Bolt Biotherapeutics. However, Pfizer Inc is 2.72 times less risky than Bolt Biotherapeutics. It trades about -0.04 of its potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.02 per unit of risk. If you would invest 4,225 in Pfizer Inc on July 21, 2024 and sell it today you would lose (1,303) from holding Pfizer Inc or give up 30.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pfizer Inc vs. Bolt Biotherapeutics
Performance |
Timeline |
Pfizer Inc |
Bolt Biotherapeutics |
Pfizer and Bolt Biotherapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pfizer and Bolt Biotherapeutics
The main advantage of trading using opposite Pfizer and Bolt Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Bolt Biotherapeutics 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 Bolt Biotherapeutics will offset losses from the drop in Bolt Biotherapeutics' long position.Pfizer vs. Merck Company | Pfizer vs. Coca Cola Consolidated | Pfizer vs. Antero Midstream Partners | Pfizer vs. MRC Global |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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