Correlation Between Pfizer and IShares Core

Can any of the company-specific risk be diversified away by investing in both Pfizer and IShares Core 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 Core 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 Core 1 5, you can compare the effects of market volatilities on Pfizer and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and IShares Core.

Diversification Opportunities for Pfizer and IShares Core

-0.11

Correlation Coefficient

Pfizer  IShares Core

Good diversification

The 3 months correlation between Pfizer and IShares is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Core 1 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 1 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core 1 has no effect on the direction of Pfizer i.e., Pfizer and IShares Core go up and down completely randomly.

Pair Corralation between Pfizer and IShares Core

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the IShares Core. In addition to that, Pfizer is 10.19 times more volatile than iShares Core 1 5. It trades about -0.04 of its total potential returns per unit of risk. iShares Core 1 5 is currently generating about 0.26 per unit of volatility. If you would invest  4,744  in iShares Core 1 5 on December 28, 2024 and sell it today you would earn a total of  88.00  from holding iShares Core 1 5 or generate 1.85% return on investment over 90 days.

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

Pfizer Inc  vs.  iShares Core 1 5

Pfizer Inc

Risk-Adjusted Performance

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Core 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core 1 5 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and IShares Core

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

The idea behind Pfizer Inc and iShares Core 1 5 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.