Correlation Between Pfizer and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Pfizer and NSTAR Electric 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 NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and NSTAR Electric, you can compare the effects of market volatilities on Pfizer and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and NSTAR Electric.
Diversification Opportunities for Pfizer and NSTAR Electric
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and NSTAR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Pfizer i.e., Pfizer and NSTAR Electric go up and down completely randomly.
Pair Corralation between Pfizer and NSTAR Electric
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the NSTAR Electric. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.08 times less risky than NSTAR Electric. The stock trades about -0.01 of its potential returns per unit of risk. The NSTAR Electric is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,855 in NSTAR Electric on November 28, 2024 and sell it today you would earn a total of 995.00 from holding NSTAR Electric or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.58% |
| Values | Daily Returns |
Pfizer Inc vs. NSTAR Electric
Performance |
| Timeline |
| Pfizer Inc |
| NSTAR Electric |
Pfizer and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and NSTAR Electric
The main advantage of trading using opposite Pfizer and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Pfizer vs. Emergent Biosolutions | Pfizer vs. Bausch Health Companies | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries |
| NSTAR Electric vs. Life Time Group | NSTAR Electric vs. Arcos Dorados Holdings | NSTAR Electric vs. Alto Ingredients | NSTAR Electric vs. Griffon |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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