Correlation Between Nano Dimension and Pfizer

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

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

Diversification Opportunities for Nano Dimension and Pfizer

0.17

Correlation Coefficient

Nano Dimension  Pfizer

Average diversification

The 3 months correlation between Nano and Pfizer is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nano Dimension and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Nano Dimension 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 Nano Dimension 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 Nano Dimension i.e., Nano Dimension and Pfizer go up and down completely randomly.

Pair Corralation between Nano Dimension and Pfizer

Given the investment horizon of 90 days Nano Dimension is expected to under-perform the Pfizer. In addition to that, Nano Dimension is 1.95 times more volatile than Pfizer Inc. It trades about -0.2 of its total potential returns per unit of risk. Pfizer Inc is currently generating about -0.18 per unit of volatility. If you would invest  2,743  in Pfizer Inc on January 25, 2024 and sell it today you would lose (114.00) from holding Pfizer Inc or give up 4.16% of portfolio value over 90 days.

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

Nano Dimension  vs.  Pfizer Inc

Nano Dimension

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Dimension are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Nano Dimension is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pfizer Inc

Risk-Adjusted Performance

0 of 100

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

Pair Trading with Nano Dimension and Pfizer

The main advantage of trading using opposite Nano Dimension and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano Dimension 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 Nano Dimension 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.