Correlation Between Pfizer and Icon Longshort

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

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

Diversification Opportunities for Pfizer and Icon Longshort

0.31

Correlation Coefficient

Pfizer  Icon Longshort

Weak diversification

The 3 months correlation between Pfizer and Icon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Icon Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Longshort 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 Icon Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Longshort has no effect on the direction of Pfizer i.e., Pfizer and Icon Longshort go up and down completely randomly.

Pair Corralation between Pfizer and Icon Longshort

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Icon Longshort. In addition to that, Pfizer is 1.18 times more volatile than Icon Longshort Fund. It trades about -0.18 of its total potential returns per unit of risk. Icon Longshort Fund is currently generating about -0.12 per unit of volatility. If you would invest  2,673  in Icon Longshort Fund on January 25, 2024 and sell it today you would lose (65.00) from holding Icon Longshort Fund or give up 2.43% of portfolio value over 90 days.

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

Pfizer Inc  vs.  Icon Longshort Fund

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.

Icon Longshort

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Longshort Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and Icon Longshort

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

The idea behind Pfizer Inc and Icon Longshort Fund 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.