Correlation Between Pfizer and SOUTHERN

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

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

Diversification Opportunities for Pfizer and SOUTHERN

0.67

Correlation Coefficient

Pfizer  SOUTHERN

Poor diversification

The 3 months correlation between Pfizer and SOUTHERN is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of Pfizer i.e., Pfizer and SOUTHERN go up and down completely randomly.

Pair Corralation between Pfizer and SOUTHERN

Considering the 90-day investment horizon Pfizer is expected to generate 2.2 times less return on investment than SOUTHERN. In addition to that, Pfizer is 1.36 times more volatile than SOUTHERN PER CORP. It trades about 0.05 of its total potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.16 per unit of volatility. If you would invest  11,455  in SOUTHERN PER CORP on September 24, 2024 and sell it today you would earn a total of  355.00  from holding SOUTHERN PER CORP or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.19%
Values	Daily Returns

Pfizer Inc  vs.  SOUTHERN PER CORP

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 unsteady 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.

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pfizer and SOUTHERN

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

The idea behind Pfizer Inc and SOUTHERN PER CORP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.