diversifiable risk of combining Pfizer and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Walmart, you can compare the effects of market volatilities on Pfizer and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Walmart.
Diversification Opportunities for Pfizer and Walmart
Pair Corralation between Pfizer and Walmart
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Walmart. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 52.14 times less risky than Walmart. The stock trades about -0.09 of its potential returns per unit of risk. The Walmart is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,124 in Walmart on December 3, 2023 and sell it today you would earn a total of 752.00 from holding Walmart or generate 14.68% return on investment over 90 days.
|3 Months [change]
Pfizer Inc vs. Walmart
Pair Trading with Pfizer and WalmartThe main advantage of trading using opposite Pfizer and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position. The idea behind Pfizer Inc and Walmart 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.
Check out your portfolio center.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
|Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
|AI Investment Finder
Use AI to screen and filter profitable investment opportunities
View fundamental data based on most recent published financial statements
Search for actively traded equities including funds and ETFs from over 30 global markets