Correlation Between Pfizer and State Street

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

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

Diversification Opportunities for Pfizer and State Street

-0.8

Correlation Coefficient

Pfizer  State Street

Pay attention - limited upside

The 3 months correlation between Pfizer and State is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and State Street Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Institu 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Institu has no effect on the direction of Pfizer i.e., Pfizer and State Street go up and down completely randomly.

Pair Corralation between Pfizer and State Street

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the State Street. In addition to that, Pfizer is 3.01 times more volatile than State Street Institutional. It trades about -0.04 of its total potential returns per unit of risk. State Street Institutional is currently generating about 0.09 per unit of volatility. If you would invest  1,433  in State Street Institutional on September 15, 2024 and sell it today you would earn a total of  15.00  from holding State Street Institutional or generate 1.05% 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.  State Street Institutional

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

State Street Institu

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Institutional are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and State Street

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

The idea behind Pfizer Inc and State Street Institutional 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.