Correlation Between Pfizer and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Pfizer and Northern Lights 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 Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Northern Lights, you can compare the effects of market volatilities on Pfizer and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Northern Lights.
Diversification Opportunities for Pfizer and Northern Lights
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and Northern is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Pfizer i.e., Pfizer and Northern Lights go up and down completely randomly.
Pair Corralation between Pfizer and Northern Lights
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Northern Lights. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 69.21 times less risky than Northern Lights. The stock trades about -0.07 of its potential returns per unit of risk. The Northern Lights is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Northern Lights on August 26, 2024 and sell it today you would earn a total of 2,754 from holding Northern Lights or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 19.72% |
| Values | Daily Returns |
Pfizer Inc vs. Northern Lights
Performance |
| Timeline |
| Pfizer Inc |
| Northern Lights |
Pfizer and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Northern Lights
The main advantage of trading using opposite Pfizer and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| Pfizer vs. Capricor Therapeutics | Pfizer vs. Akari Therapeutics PLC | Pfizer vs. Soleno Therapeutics | Pfizer vs. Bio Path Holdings |
| Northern Lights vs. Morningstar Unconstrained Allocation | Northern Lights vs. High Yield Municipal Fund | Northern Lights vs. Via Renewables | Northern Lights vs. Knife River |
Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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