Correlation Between Pfizer and Slate Grocery

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

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

Diversification Opportunities for Pfizer and Slate Grocery

-0.31

Correlation Coefficient

Pfizer  Slate Grocery

Very good diversification

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

Pair Corralation between Pfizer and Slate Grocery

Assuming the 90 days trading horizon Pfizer Inc CDR is expected to under-perform the Slate Grocery. In addition to that, Pfizer is 1.11 times more volatile than Slate Grocery REIT. It trades about -0.08 of its total potential returns per unit of risk. Slate Grocery REIT is currently generating about -0.05 per unit of volatility. If you would invest  1,005  in Slate Grocery REIT on October 6, 2024 and sell it today you would lose (45.00) from holding Slate Grocery REIT or give up 4.48% of portfolio value over 90 days.

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

Pfizer Inc CDR  vs.  Slate Grocery REIT

Pfizer Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Slate Grocery REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pfizer and Slate Grocery

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

The idea behind Pfizer Inc CDR and Slate Grocery REIT 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.