Correlation Between Pfizer and IShares Emerging

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

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

Diversification Opportunities for Pfizer and IShares Emerging

0.61

Correlation Coefficient

Pfizer  IShares Emerging

Poor diversification

The 3 months correlation between Pfizer and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Markets 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 IShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Markets has no effect on the direction of Pfizer i.e., Pfizer and IShares Emerging go up and down completely randomly.

Pair Corralation between Pfizer and IShares Emerging

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the IShares Emerging. In addition to that, Pfizer is 1.36 times more volatile than iShares Emerging Markets. It trades about -0.05 of its total potential returns per unit of risk. iShares Emerging Markets is currently generating about 0.0 per unit of volatility. If you would invest  2,098  in iShares Emerging Markets on October 9, 2024 and sell it today you would lose (15.00) from holding iShares Emerging Markets or give up 0.71% of portfolio value over 90 days.

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

Pfizer Inc  vs.  iShares Emerging Markets

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 uncertain 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.

iShares Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, IShares Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pfizer and IShares Emerging

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

The idea behind Pfizer Inc and iShares Emerging Markets 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.