Correlation Between Pfizer and IShares Morningstar

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

Diversification Opportunities for Pfizer and IShares Morningstar

-0.62

Correlation Coefficient

Pfizer  IShares Morningstar

Excellent diversification

The 3 months correlation between Pfizer and IShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Morningstar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of Pfizer i.e., Pfizer and IShares Morningstar go up and down completely randomly.

Pair Corralation between Pfizer and IShares Morningstar

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the IShares Morningstar. In addition to that, Pfizer is 1.25 times more volatile than iShares Morningstar Small Cap. It trades about -0.1 of its total potential returns per unit of risk. iShares Morningstar Small Cap is currently generating about 0.16 per unit of volatility. If you would invest  4,820  in iShares Morningstar Small Cap on August 30, 2024 and sell it today you would earn a total of  574.00  from holding iShares Morningstar Small Cap or generate 11.91% return on investment over 90 days.

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

Pfizer Inc  vs.  iShares Morningstar Small Cap

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 Morningstar

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Small Cap are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, IShares Morningstar may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Pfizer and IShares Morningstar

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

The idea behind Pfizer Inc and iShares Morningstar Small Cap 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 CEOs Directory module to screen CEOs from public companies around the world.