Correlation Between Pfizer and SouthPoint Bancshares

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

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

Diversification Opportunities for Pfizer and SouthPoint Bancshares

-0.27

Correlation Coefficient

Pfizer  SouthPoint Bancshares

Very good diversification

The 3 months correlation between Pfizer and SouthPoint is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and SouthPoint Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SouthPoint Bancshares 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 SouthPoint Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SouthPoint Bancshares has no effect on the direction of Pfizer i.e., Pfizer and SouthPoint Bancshares go up and down completely randomly.

Pair Corralation between Pfizer and SouthPoint Bancshares

Considering the 90-day investment horizon Pfizer Inc is expected to generate 1.26 times more return on investment than SouthPoint Bancshares. However, Pfizer is 1.26 times more volatile than SouthPoint Bancshares. It trades about -0.06 of its potential returns per unit of risk. SouthPoint Bancshares is currently generating about -0.41 per unit of risk. If you would invest  2,620  in Pfizer Inc on December 5, 2024 and sell it today you would lose (45.00) from holding Pfizer Inc or give up 1.72% of portfolio value over 90 days.

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

Pfizer Inc  vs.  SouthPoint Bancshares

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) 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.

SouthPoint Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days SouthPoint Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Pfizer and SouthPoint Bancshares

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

The idea behind Pfizer Inc and SouthPoint Bancshares 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 Transaction History module to view history of all your transactions and understand their impact on performance.