Correlation Between Pfizer and Bayer Aktiengesellscha

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

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

Diversification Opportunities for Pfizer and Bayer Aktiengesellscha

0.51

Correlation Coefficient

Pfizer  Bayer Aktiengesellscha

Very weak diversification

The 3 months correlation between Pfizer and Bayer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Bayer Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer Aktiengesellschaft 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 Bayer Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer Aktiengesellschaft has no effect on the direction of Pfizer i.e., Pfizer and Bayer Aktiengesellscha go up and down completely randomly.

Pair Corralation between Pfizer and Bayer Aktiengesellscha

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.73 times more return on investment than Bayer Aktiengesellscha. However, Pfizer Inc is 1.37 times less risky than Bayer Aktiengesellscha. It trades about -0.04 of its potential returns per unit of risk. Bayer Aktiengesellschaft is currently generating about -0.13 per unit of risk. If you would invest  3,388  in Pfizer Inc on February 27, 2024 and sell it today you would lose (500.00) from holding Pfizer Inc or give up 14.76% of portfolio value over 90 days.

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

Pfizer Inc  vs.  Bayer Aktiengesellschaft

Pfizer Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Bayer Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayer Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bayer Aktiengesellscha is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pfizer and Bayer Aktiengesellscha

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

The idea behind Pfizer Inc and Bayer Aktiengesellschaft 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .