Correlation Between Pfizer and SHP ETF

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

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

Diversification Opportunities for Pfizer and SHP ETF

0.67

Correlation Coefficient

Pfizer  SHP ETF

Poor diversification

The 3 months correlation between Pfizer and SHP is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust 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 SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of Pfizer i.e., Pfizer and SHP ETF go up and down completely randomly.

Pair Corralation between Pfizer and SHP ETF

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the SHP ETF. In addition to that, Pfizer is 4.94 times more volatile than SHP ETF Trust. It trades about -0.1 of its total potential returns per unit of risk. SHP ETF Trust is currently generating about -0.04 per unit of volatility. If you would invest  4,806  in SHP ETF Trust on September 5, 2024 and sell it today you would lose (35.00) from holding SHP ETF Trust or give up 0.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Pfizer Inc  vs.  SHP ETF Trust

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 weak 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.

SHP ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHP ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, SHP ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pfizer and SHP ETF

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

The idea behind Pfizer Inc and SHP ETF Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.