Correlation Between Slate Grocery and Pfizer

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

By analyzing existing cross correlation between Slate Grocery REIT and Pfizer Inc CDR, you can compare the effects of market volatilities on Slate Grocery and Pfizer 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 Slate Grocery with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Grocery and Pfizer.

Diversification Opportunities for Slate Grocery and Pfizer

-0.16

Correlation Coefficient

Slate Grocery  Pfizer

Good diversification

The 3 months correlation between Slate and Pfizer is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT and Pfizer Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc CDR and Slate Grocery 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 Slate Grocery REIT are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc CDR has no effect on the direction of Slate Grocery i.e., Slate Grocery and Pfizer go up and down completely randomly.

Pair Corralation between Slate Grocery and Pfizer

Assuming the 90 days trading horizon Slate Grocery REIT is expected to generate 1.12 times more return on investment than Pfizer. However, Slate Grocery is 1.12 times more volatile than Pfizer Inc CDR. It trades about 0.06 of its potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.03 per unit of risk. If you would invest  729.00  in Slate Grocery REIT on October 5, 2024 and sell it today you would earn a total of  231.00  from holding Slate Grocery REIT or generate 31.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Slate Grocery REIT  vs.  Pfizer Inc CDR

Slate Grocery REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Slate Grocery is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pfizer Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Slate Grocery and Pfizer

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

The idea behind Slate Grocery REIT and Pfizer Inc CDR 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.