Correlation Between Pfizer and Vanguard Intermediate

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

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

Diversification Opportunities for Pfizer and Vanguard Intermediate

-0.12

Correlation Coefficient

Pfizer  Vanguard Intermediate

Good diversification

The 3 months correlation between Pfizer and Vanguard is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Vanguard Intermediate Term Tre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate 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 Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Pfizer i.e., Pfizer and Vanguard Intermediate go up and down completely randomly.

Pair Corralation between Pfizer and Vanguard Intermediate

Considering the 90-day investment horizon Pfizer Inc is expected to generate 5.18 times more return on investment than Vanguard Intermediate. However, Pfizer is 5.18 times more volatile than Vanguard Intermediate Term Treasury. It trades about 0.05 of its potential returns per unit of risk. Vanguard Intermediate Term Treasury is currently generating about 0.05 per unit of risk. If you would invest  2,578  in Pfizer Inc on November 28, 2024 and sell it today you would earn a total of  96.00  from holding Pfizer Inc or generate 3.72% 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.  Vanguard Intermediate Term Tre

Pfizer Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Vanguard Intermediate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Treasury are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pfizer and Vanguard Intermediate

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

The idea behind Pfizer Inc and Vanguard Intermediate Term Treasury 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.