Correlation Between Solid Impact and Pfizer

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

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

Diversification Opportunities for Solid Impact and Pfizer

0.0

Correlation Coefficient

Solid Impact  Pfizer

Pay attention - limited upside

The 3 months correlation between Solid and Pfizer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solid Impact Investments 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 Solid Impact 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 Solid Impact Investments 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 Solid Impact i.e., Solid Impact and Pfizer go up and down completely randomly.

Pair Corralation between Solid Impact and Pfizer

Assuming the 90 days trading horizon Solid Impact Investments is expected to under-perform the Pfizer. In addition to that, Solid Impact is 1.98 times more volatile than Pfizer Inc CDR. It trades about -0.06 of its total potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.06 per unit of volatility. If you would invest  2,058  in Pfizer Inc CDR on October 4, 2024 and sell it today you would lose (827.00) from holding Pfizer Inc CDR or give up 40.18% of portfolio value over 90 days.

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

Solid Impact Investments  vs.  Pfizer Inc CDR

Solid Impact Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Impact Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solid Impact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 very healthy basic indicators, Pfizer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Solid Impact and Pfizer

The main advantage of trading using opposite Solid Impact and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Impact 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 Solid Impact Investments 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.