Correlation Between Northfield Bancorp and Pfizer

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

By analyzing existing cross correlation between Northfield Bancorp and Pfizer Inc, you can compare the effects of market volatilities on Northfield Bancorp 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 Northfield Bancorp with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northfield Bancorp and Pfizer.

Diversification Opportunities for Northfield Bancorp and Pfizer

0.3

Correlation Coefficient

Northfield Bancorp  Pfizer

Weak diversification

The 3 months correlation between Northfield and Pfizer is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Northfield Bancorp and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Northfield Bancorp 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 Northfield Bancorp 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 Northfield Bancorp i.e., Northfield Bancorp and Pfizer go up and down completely randomly.

Pair Corralation between Northfield Bancorp and Pfizer

Given the investment horizon of 90 days Northfield Bancorp is expected to generate 1.38 times more return on investment than Pfizer. However, Northfield Bancorp is 1.38 times more volatile than Pfizer Inc. It trades about -0.04 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.06 per unit of risk. If you would invest  1,352  in Northfield Bancorp on March 28, 2024 and sell it today you would lose (491.00) from holding Northfield Bancorp or give up 36.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Northfield Bancorp  vs.  Pfizer Inc

Northfield Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northfield Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pfizer Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Northfield Bancorp and Pfizer

The main advantage of trading using opposite Northfield Bancorp and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northfield Bancorp 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 Northfield Bancorp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.