Correlation Between IShares Fundamental and Pfizer

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

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

Diversification Opportunities for IShares Fundamental and Pfizer

-0.32

Correlation Coefficient

IShares Fundamental  Pfizer

Very good diversification

The 3 months correlation between IShares and Pfizer is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Pfizer Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc CDR and IShares Fundamental 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 iShares Fundamental Hedged 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 CDR has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Pfizer go up and down completely randomly.

Pair Corralation between IShares Fundamental and Pfizer

Assuming the 90 days trading horizon iShares Fundamental Hedged is expected to under-perform the Pfizer. But the etf apears to be less risky and, when comparing its historical volatility, iShares Fundamental Hedged is 1.95 times less risky than Pfizer. The etf trades about -0.06 of its potential returns per unit of risk. The Pfizer Inc CDR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,155  in Pfizer Inc CDR on December 4, 2024 and sell it today you would earn a total of  58.00  from holding Pfizer Inc CDR or generate 5.02% return on investment over 90 days.

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

iShares Fundamental Hedged  vs.  Pfizer Inc CDR

iShares Fundamental

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Fundamental Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Fundamental is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pfizer Inc CDR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Pfizer is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Fundamental and Pfizer

The main advantage of trading using opposite IShares Fundamental and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental 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 iShares Fundamental Hedged and Pfizer Inc CDR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.