Correlation Between Sirius XM and Pfizer

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Can any of the company-specific risk be diversified away by investing in both Sirius XM 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 Sirius XM and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sirius XM Holding and Pfizer Inc, you can compare the effects of market volatilities on Sirius XM 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 Sirius XM with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sirius XM and Pfizer.

Diversification Opportunities for Sirius XM and Pfizer

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sirius and Pfizer is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sirius XM Holding and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Sirius XM 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 Sirius XM Holding 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 Sirius XM i.e., Sirius XM and Pfizer go up and down completely randomly.

Pair Corralation between Sirius XM and Pfizer

Given the investment horizon of 90 days Sirius XM Holding is expected to under-perform the Pfizer. But the stock apears to be less risky and, when comparing its historical volatility, Sirius XM Holding is 1.06 times less risky than Pfizer. The stock trades about -0.53 of its potential returns per unit of risk. The Pfizer Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,689  in Pfizer Inc on December 29, 2023 and sell it today you would earn a total of  89.00  from holding Pfizer Inc or generate 3.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Sirius XM Holding  vs.  Pfizer Inc

 Performance 
       Timeline  
Sirius XM Holding 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Sirius XM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Pfizer Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sirius XM and Pfizer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sirius XM and Pfizer

The main advantage of trading using opposite Sirius XM and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sirius XM 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 Sirius XM Holding 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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