Correlation Between Pfizer and Linamar

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

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

Diversification Opportunities for Pfizer and Linamar

0.67

Correlation Coefficient

Pfizer  Linamar

Poor diversification

The 3 months correlation between Pfizer and Linamar is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar 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 Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Pfizer i.e., Pfizer and Linamar go up and down completely randomly.

Pair Corralation between Pfizer and Linamar

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Linamar. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.26 times less risky than Linamar. The stock trades about -0.03 of its potential returns per unit of risk. The Linamar is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,047  in Linamar on May 3, 2025 and sell it today you would lose (145.00) from holding Linamar or give up 2.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.77%
Values	Daily Returns

Pfizer Inc  vs.  Linamar

Pfizer Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 1 (%) 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.

Linamar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Linamar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Linamar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Linamar

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

The idea behind Pfizer Inc and Linamar 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.