Correlation Between Veeco Instruments and Pfizer

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

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

Diversification Opportunities for Veeco Instruments and Pfizer

-0.29

Correlation Coefficient

Veeco Instruments  Pfizer

Very good diversification

The 3 months correlation between Veeco and Pfizer is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Veeco Instruments 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 Veeco Instruments 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 Veeco Instruments i.e., Veeco Instruments and Pfizer go up and down completely randomly.

Pair Corralation between Veeco Instruments and Pfizer

Given the investment horizon of 90 days Veeco Instruments is expected to generate 2.43 times more return on investment than Pfizer. However, Veeco Instruments is 2.43 times more volatile than Pfizer Inc. It trades about -0.05 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.19 per unit of risk. If you would invest  3,499  in Veeco Instruments on January 25, 2024 and sell it today you would lose (110.00) from holding Veeco Instruments or give up 3.14% of portfolio value over 90 days.

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

Veeco Instruments  vs.  Pfizer Inc

Veeco Instruments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Veeco Instruments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Veeco Instruments is not utilizing all of its potentials. The latest 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 Veeco Instruments and Pfizer

The main advantage of trading using opposite Veeco Instruments and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments 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 Veeco Instruments 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.