Correlation Between Digi International and PFIZER

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

By analyzing existing cross correlation between Digi International and PFIZER INC 275, you can compare the effects of market volatilities on Digi International 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 Digi International with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and PFIZER.

Diversification Opportunities for Digi International and PFIZER

0.33

Correlation Coefficient

Digi International  PFIZER

Weak diversification

The 3 months correlation between Digi and PFIZER is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and PFIZER INC 275 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 275 and Digi International 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 Digi International 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 275 has no effect on the direction of Digi International i.e., Digi International and PFIZER go up and down completely randomly.

Pair Corralation between Digi International and PFIZER

Given the investment horizon of 90 days Digi International is expected to under-perform the PFIZER. In addition to that, Digi International is 3.74 times more volatile than PFIZER INC 275. It trades about -0.35 of its total potential returns per unit of risk. PFIZER INC 275 is currently generating about -0.21 per unit of volatility. If you would invest  9,784  in PFIZER INC 275 on October 11, 2024 and sell it today you would lose (212.00) from holding PFIZER INC 275 or give up 2.17% of portfolio value over 90 days.

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

Digi International  vs.  PFIZER INC 275

Digi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digi International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Digi International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

PFIZER INC 275

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 275 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Digi International and PFIZER

The main advantage of trading using opposite Digi International and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International 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 Digi International and PFIZER INC 275 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.