Correlation Between Pfizer and IShares Latin

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

Diversification Opportunities for Pfizer and IShares Latin

0.73

Correlation Coefficient

Pfizer  IShares Latin

Poor diversification

The 3 months correlation between Pfizer and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Latin America 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 Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Latin America has no effect on the direction of Pfizer i.e., Pfizer and IShares Latin go up and down completely randomly.

Pair Corralation between Pfizer and IShares Latin

Considering the 90-day investment horizon Pfizer Inc is expected to generate 1.45 times more return on investment than IShares Latin. However, Pfizer is 1.45 times more volatile than iShares Latin America. It trades about -0.06 of its potential returns per unit of risk. iShares Latin America is currently generating about -0.15 per unit of risk. If you would invest  2,787  in Pfizer Inc on September 2, 2024 and sell it today you would lose (166.00) from holding Pfizer Inc or give up 5.96% 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 Latin America

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 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.

iShares Latin America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Latin America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Pfizer and IShares Latin

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

The idea behind Pfizer Inc and iShares Latin America 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.