Correlation Between Pfizer and Simplify Stable

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

By analyzing existing cross correlation between Pfizer Inc and Simplify Stable Income, you can compare the effects of market volatilities on Pfizer and Simplify Stable 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 Simplify Stable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Simplify Stable.

Diversification Opportunities for Pfizer and Simplify Stable

-0.88

Correlation Coefficient

Pfizer  Simplify Stable

Pay attention - limited upside

The 3 months correlation between Pfizer and Simplify is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Simplify Stable Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Stable Income 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 Simplify Stable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Stable Income has no effect on the direction of Pfizer i.e., Pfizer and Simplify Stable go up and down completely randomly.

Pair Corralation between Pfizer and Simplify Stable

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Simplify Stable. In addition to that, Pfizer is 6.19 times more volatile than Simplify Stable Income. It trades about -0.12 of its total potential returns per unit of risk. Simplify Stable Income is currently generating about 0.11 per unit of volatility. If you would invest  2,422  in Simplify Stable Income on September 12, 2024 and sell it today you would earn a total of  39.00  from holding Simplify Stable Income or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pfizer Inc  vs.  Simplify Stable Income

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Simplify Stable Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Stable Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Simplify Stable is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pfizer and Simplify Stable

The main advantage of trading using opposite Pfizer and Simplify Stable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Simplify Stable 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 Simplify Stable will offset losses from the drop in Simplify Stable's long position.

The idea behind Pfizer Inc and Simplify Stable Income 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.