Correlation Between Pfizer and VanEck Fallen

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Can any of the company-specific risk be diversified away by investing in both Pfizer and VanEck Fallen 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 VanEck Fallen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and VanEck Fallen Angel, you can compare the effects of market volatilities on Pfizer and VanEck Fallen 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 VanEck Fallen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and VanEck Fallen.

Diversification Opportunities for Pfizer and VanEck Fallen

PfizerVanEckDiversified AwayPfizerVanEckDiversified Away100%
0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Pfizer and VanEck is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and VanEck Fallen Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Fallen Angel 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 VanEck Fallen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Fallen Angel has no effect on the direction of Pfizer i.e., Pfizer and VanEck Fallen go up and down completely randomly.

Pair Corralation between Pfizer and VanEck Fallen

Considering the 90-day investment horizon Pfizer Inc is expected to generate 5.89 times more return on investment than VanEck Fallen. However, Pfizer is 5.89 times more volatile than VanEck Fallen Angel. It trades about 0.04 of its potential returns per unit of risk. VanEck Fallen Angel is currently generating about 0.02 per unit of risk. If you would invest  2,609  in Pfizer Inc on November 25, 2024 and sell it today you would earn a total of  21.00  from holding Pfizer Inc or generate 0.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  VanEck Fallen Angel

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -4-2024
JavaScript chart by amCharts 3.21.15PFE ANGL
       Timeline  
Pfizer Inc 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2525.52626.527
VanEck Fallen Angel 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Fallen Angel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, VanEck Fallen is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb28.328.428.528.628.728.828.929

Pfizer and VanEck Fallen Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.64-3.48-2.31-1.150.01.152.333.524.75.89 1234
JavaScript chart by amCharts 3.21.15PFE ANGL
       Returns  

Pair Trading with Pfizer and VanEck Fallen

The main advantage of trading using opposite Pfizer and VanEck Fallen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, VanEck Fallen 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 VanEck Fallen will offset losses from the drop in VanEck Fallen's long position.
The idea behind Pfizer Inc and VanEck Fallen Angel 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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