Correlation Between Summit Materials and PFIZER

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

By analyzing existing cross correlation between Summit Materials and PFIZER INC 43, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and PFIZER.

Diversification Opportunities for Summit Materials and PFIZER

-0.62

Correlation Coefficient

Summit Materials  PFIZER

Excellent diversification

The 3 months correlation between Summit and PFIZER is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and PFIZER INC 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 43 and Summit Materials 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 Summit Materials 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 43 has no effect on the direction of Summit Materials i.e., Summit Materials and PFIZER go up and down completely randomly.

Pair Corralation between Summit Materials and PFIZER

Considering the 90-day investment horizon Summit Materials is expected to generate 0.54 times more return on investment than PFIZER. However, Summit Materials is 1.85 times less risky than PFIZER. It trades about 0.21 of its potential returns per unit of risk. PFIZER INC 43 is currently generating about -0.17 per unit of risk. If you would invest  5,093  in Summit Materials on October 12, 2024 and sell it today you would earn a total of  112.00  from holding Summit Materials or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	80.0%
Values	Daily Returns

Summit Materials  vs.  PFIZER INC 43

Summit Materials

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

PFIZER INC 43

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 43 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 PFIZER INC 43 investors.

Pair Trading with Summit Materials and PFIZER

The main advantage of trading using opposite Summit Materials and PFIZER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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 Summit Materials and PFIZER INC 43 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.