Correlation Between Pfizer and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Pfizer and Stone Ridge 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 Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Stone Ridge 2063, you can compare the effects of market volatilities on Pfizer and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Stone Ridge.
Diversification Opportunities for Pfizer and Stone Ridge
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and Stone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Stone Ridge 2063 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2063 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2063 has no effect on the direction of Pfizer i.e., Pfizer and Stone Ridge go up and down completely randomly.
Pair Corralation between Pfizer and Stone Ridge
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Stone Ridge. In addition to that, Pfizer is 2.25 times more volatile than Stone Ridge 2063. It trades about -0.16 of its total potential returns per unit of risk. Stone Ridge 2063 is currently generating about 0.05 per unit of volatility. If you would invest 2,730 in Stone Ridge 2063 on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Stone Ridge 2063 or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Stone Ridge 2063
Performance |
| Timeline |
| Pfizer Inc |
| Stone Ridge 2063 |
Pfizer and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Stone Ridge
The main advantage of trading using opposite Pfizer and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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