Correlation Between Pfizer and Direxion Monthly

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

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

Diversification Opportunities for Pfizer and Direxion Monthly

-0.26

Correlation Coefficient

Pfizer  Direxion Monthly

Very good diversification

The 3 months correlation between Pfizer and Direxion is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Direxion Monthly Sp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly 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 Direxion Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Monthly has no effect on the direction of Pfizer i.e., Pfizer and Direxion Monthly go up and down completely randomly.

Pair Corralation between Pfizer and Direxion Monthly

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Direxion Monthly. In addition to that, Pfizer is 1.03 times more volatile than Direxion Monthly Sp. It trades about -0.04 of its total potential returns per unit of risk. Direxion Monthly Sp is currently generating about 0.07 per unit of volatility. If you would invest  4,725  in Direxion Monthly Sp on October 22, 2024 and sell it today you would earn a total of  2,020  from holding Direxion Monthly Sp or generate 42.75% return on investment over 90 days.

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

Pfizer Inc  vs.  Direxion Monthly Sp

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Direxion Monthly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Monthly Sp has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Direxion Monthly 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 Direxion Monthly

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

The idea behind Pfizer Inc and Direxion Monthly Sp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.