Correlation Between Pfizer and X Square

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

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

Diversification Opportunities for Pfizer and X Square

-0.69

Correlation Coefficient

Pfizer  X Square

Excellent diversification

The 3 months correlation between Pfizer and SQBIX is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and X Square Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Square Balanced 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 X Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Square Balanced has no effect on the direction of Pfizer i.e., Pfizer and X Square go up and down completely randomly.

Pair Corralation between Pfizer and X Square

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the X Square. In addition to that, Pfizer is 2.84 times more volatile than X Square Balanced. It trades about -0.06 of its total potential returns per unit of risk. X Square Balanced is currently generating about 0.23 per unit of volatility. If you would invest  1,347  in X Square Balanced on September 3, 2024 and sell it today you would earn a total of  101.00  from holding X Square Balanced or generate 7.5% return on investment over 90 days.

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

Pfizer Inc  vs.  X Square Balanced

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 rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

X Square Balanced

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in X Square Balanced are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, X Square may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pfizer and X Square

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

The idea behind Pfizer Inc and X Square Balanced 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.