Correlation Between BioCryst Pharmaceuticals and Pfizer

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

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

Diversification Opportunities for BioCryst Pharmaceuticals and Pfizer

0.78

Correlation Coefficient

BioCryst Pharmaceuticals  Pfizer

Poor diversification

The 3 months correlation between BioCryst and Pfizer is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BioCryst Pharmaceuticals and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and BioCryst Pharmaceuticals 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 BioCryst Pharmaceuticals are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of BioCryst Pharmaceuticals i.e., BioCryst Pharmaceuticals and Pfizer go up and down completely randomly.

Pair Corralation between BioCryst Pharmaceuticals and Pfizer

Given the investment horizon of 90 days BioCryst Pharmaceuticals is expected to generate 2.88 times more return on investment than Pfizer. However, BioCryst Pharmaceuticals is 2.88 times more volatile than Pfizer Inc. It trades about 0.07 of its potential returns per unit of risk. Pfizer Inc is currently generating about 0.12 per unit of risk. If you would invest  551.00  in BioCryst Pharmaceuticals on March 4, 2024 and sell it today you would earn a total of  95.00  from holding BioCryst Pharmaceuticals or generate 17.24% return on investment over 90 days.

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

BioCryst Pharmaceuticals  vs.  Pfizer Inc

BioCryst Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BioCryst Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BioCryst Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pfizer Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with BioCryst Pharmaceuticals and Pfizer

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

The idea behind BioCryst Pharmaceuticals and Pfizer Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.