Correlation Between Summa Silver and Pfizer

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

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

Diversification Opportunities for Summa Silver and Pfizer

-0.33

Correlation Coefficient

Summa Silver  Pfizer

Very good diversification

The 3 months correlation between Summa and Pfizer is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp 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 Summa Silver 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 Summa Silver Corp 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 Summa Silver i.e., Summa Silver and Pfizer go up and down completely randomly.

Pair Corralation between Summa Silver and Pfizer

Assuming the 90 days trading horizon Summa Silver Corp is expected to generate 4.32 times more return on investment than Pfizer. However, Summa Silver is 4.32 times more volatile than Pfizer Inc CDR. It trades about 0.11 of its potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.01 per unit of risk. If you would invest  28.00  in Summa Silver Corp on December 22, 2024 and sell it today you would earn a total of  8.00  from holding Summa Silver Corp or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Summa Silver Corp  vs.  Pfizer Inc CDR

Summa Silver Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Summa Silver Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Summa Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Pfizer Inc CDR

Risk-Adjusted Performance

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 Summa Silver and Pfizer

The main advantage of trading using opposite Summa Silver and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver 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 Summa Silver Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.