Correlation Between Pfizer and Vanguard FTSE

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

Diversification Opportunities for Pfizer and Vanguard FTSE

0.59

Correlation Coefficient

Pfizer  Vanguard FTSE

Very weak diversification

The 3 months correlation between Pfizer and Vanguard is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Vanguard FTSE Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Pacific 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 FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Pacific has no effect on the direction of Pfizer i.e., Pfizer and Vanguard FTSE go up and down completely randomly.

Pair Corralation between Pfizer and Vanguard FTSE

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Vanguard FTSE. In addition to that, Pfizer is 1.6 times more volatile than Vanguard FTSE Pacific. It trades about -0.13 of its total potential returns per unit of risk. Vanguard FTSE Pacific is currently generating about -0.01 per unit of volatility. If you would invest  7,605  in Vanguard FTSE Pacific on September 12, 2024 and sell it today you would lose (62.00) from holding Vanguard FTSE Pacific or give up 0.82% of portfolio value over 90 days.

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

Pfizer Inc  vs.  Vanguard FTSE Pacific

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 weak 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.

Vanguard FTSE Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Vanguard FTSE is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pfizer and Vanguard FTSE

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

The idea behind Pfizer Inc and Vanguard FTSE Pacific 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.