Correlation Between Pfizer and NEXE Innovations

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

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

Diversification Opportunities for Pfizer and NEXE Innovations

-0.39

Correlation Coefficient

Pfizer  NEXE Innovations

Very good diversification

The 3 months correlation between Pfizer and NEXE is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and NEXE Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXE Innovations 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 NEXE Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXE Innovations has no effect on the direction of Pfizer i.e., Pfizer and NEXE Innovations go up and down completely randomly.

Pair Corralation between Pfizer and NEXE Innovations

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.23 times more return on investment than NEXE Innovations. However, Pfizer Inc is 4.39 times less risky than NEXE Innovations. It trades about 0.02 of its potential returns per unit of risk. NEXE Innovations is currently generating about -0.1 per unit of risk. If you would invest  2,593  in Pfizer Inc on December 20, 2024 and sell it today you would earn a total of  28.00  from holding Pfizer Inc or generate 1.08% 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.  NEXE Innovations

Pfizer Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

NEXE Innovations

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEXE Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pfizer and NEXE Innovations

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

The idea behind Pfizer Inc and NEXE Innovations 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.