Correlation Between Bio Rad and Pfizer

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

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

Diversification Opportunities for Bio Rad and Pfizer

0.38

Correlation Coefficient

Bio Rad  Pfizer

Weak diversification

The 3 months correlation between Bio and Pfizer is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bio Rad Laboratories and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Bio Rad 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 Bio Rad Laboratories 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 Bio Rad i.e., Bio Rad and Pfizer go up and down completely randomly.

Pair Corralation between Bio Rad and Pfizer

Considering the 90-day investment horizon Bio Rad Laboratories is expected to under-perform the Pfizer. In addition to that, Bio Rad is 1.28 times more volatile than Pfizer Inc. It trades about -0.1 of its total potential returns per unit of risk. Pfizer Inc is currently generating about 0.03 per unit of volatility. If you would invest  2,725  in Pfizer Inc on February 12, 2024 and sell it today you would earn a total of  76.00  from holding Pfizer Inc or generate 2.79% return on investment over 90 days.

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

Bio Rad Laboratories  vs.  Pfizer Inc

Bio Rad Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Rad Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

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

Pair Trading with Bio Rad and Pfizer

The main advantage of trading using opposite Bio Rad and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Rad 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 Bio Rad Laboratories 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 CEOs Directory module to screen CEOs from public companies around the world.