Correlation Between Pfizer and Stone Ridge

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

By analyzing existing cross correlation between Pfizer Inc and Stone Ridge 2057, you can compare the effects of market volatilities on Pfizer and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Stone Ridge.

Diversification Opportunities for Pfizer and Stone Ridge

0.01

Correlation Coefficient

Pfizer  Stone Ridge

Significant diversification

The 3 months correlation between Pfizer and Stone is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Stone Ridge 2057 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2057 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2057 has no effect on the direction of Pfizer i.e., Pfizer and Stone Ridge go up and down completely randomly.

Pair Corralation between Pfizer and Stone Ridge

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Stone Ridge. In addition to that, Pfizer is 2.02 times more volatile than Stone Ridge 2057. It trades about -0.05 of its total potential returns per unit of risk. Stone Ridge 2057 is currently generating about 0.03 per unit of volatility. If you would invest  15,427  in Stone Ridge 2057 on December 28, 2024 and sell it today you would earn a total of  176.00  from holding Stone Ridge 2057 or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Pfizer Inc  vs.  Stone Ridge 2057

Pfizer Inc

Risk-Adjusted Performance

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Stone Ridge 2057

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge 2057 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Stone Ridge is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Pfizer and Stone Ridge

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

The idea behind Pfizer Inc and Stone Ridge 2057 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.