Correlation Between HUT 8 and Pfizer
Can any of the company-specific risk be diversified away by investing in both HUT 8 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 HUT 8 and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUT 8 P and Pfizer Inc, you can compare the effects of market volatilities on HUT 8 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 HUT 8 with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUT 8 and Pfizer.
Diversification Opportunities for HUT 8 and Pfizer
Pay attention - limited upside
The 3 months correlation between HUT and Pfizer is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding HUT 8 P and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and HUT 8 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 HUT 8 P 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 has no effect on the direction of HUT 8 i.e., HUT 8 and Pfizer go up and down completely randomly.
Pair Corralation between HUT 8 and Pfizer
Assuming the 90 days horizon HUT 8 P is expected to generate 4.81 times more return on investment than Pfizer. However, HUT 8 is 4.81 times more volatile than Pfizer Inc. It trades about 0.08 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.01 per unit of risk. If you would invest 1,047 in HUT 8 P on August 26, 2024 and sell it today you would earn a total of 1,453 from holding HUT 8 P or generate 138.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
HUT 8 P vs. Pfizer Inc
Performance |
| Timeline |
| HUT 8 P |
| Pfizer Inc |
HUT 8 and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUT 8 and Pfizer
The main advantage of trading using opposite HUT 8 and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUT 8 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 HUT 8 P and Pfizer Inc 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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