Correlation Between Pfizer and IShares Cybersecurity

Can any of the company-specific risk be diversified away by investing in both Pfizer and IShares Cybersecurity 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 Cybersecurity 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 Cybersecurity and, you can compare the effects of market volatilities on Pfizer and IShares Cybersecurity 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 Cybersecurity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and IShares Cybersecurity.

Diversification Opportunities for Pfizer and IShares Cybersecurity

-0.53

Correlation Coefficient

Pfizer  IShares Cybersecurity

Excellent diversification

The 3 months correlation between Pfizer and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Cybersecurity and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Cybersecurity and 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 Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Cybersecurity and has no effect on the direction of Pfizer i.e., Pfizer and IShares Cybersecurity go up and down completely randomly.

Pair Corralation between Pfizer and IShares Cybersecurity

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the IShares Cybersecurity. In addition to that, Pfizer is 1.54 times more volatile than iShares Cybersecurity and. It trades about -0.09 of its total potential returns per unit of risk. iShares Cybersecurity and is currently generating about -0.01 per unit of volatility. If you would invest  5,119  in iShares Cybersecurity and on September 13, 2024 and sell it today you would lose (23.00) from holding iShares Cybersecurity and or give up 0.45% of portfolio value over 90 days.

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

Pfizer Inc  vs.  iShares Cybersecurity and

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

iShares Cybersecurity and

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Cybersecurity and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, IShares Cybersecurity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pfizer and IShares Cybersecurity

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

The idea behind Pfizer Inc and iShares Cybersecurity and 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.