Correlation Between Pfizer and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Pfizer and Dimensional ETF 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 Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Dimensional ETF Trust, you can compare the effects of market volatilities on Pfizer and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Dimensional ETF.
Diversification Opportunities for Pfizer and Dimensional ETF
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and Dimensional is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Pfizer i.e., Pfizer and Dimensional ETF go up and down completely randomly.
Pair Corralation between Pfizer and Dimensional ETF
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Dimensional ETF. In addition to that, Pfizer is 4.36 times more volatile than Dimensional ETF Trust. It trades about -0.38 of its total potential returns per unit of risk. Dimensional ETF Trust is currently generating about -0.14 per unit of volatility. If you would invest 4,217 in Dimensional ETF Trust on August 23, 2024 and sell it today you would lose (44.00) from holding Dimensional ETF Trust or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Dimensional ETF Trust
Performance |
| Timeline |
| Pfizer Inc |
| Dimensional ETF Trust |
Pfizer and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Dimensional ETF
The main advantage of trading using opposite Pfizer and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| Pfizer vs. Johnson Johnson | Pfizer vs. Small Cap Core | Pfizer vs. Freedom Holding Corp | Pfizer vs. Gfl Environmental Holdings |
| Dimensional ETF vs. Hartford Short Duration | Dimensional ETF vs. American Century Diversified | Dimensional ETF vs. First Trust Short | Dimensional ETF vs. HUMANA INC |
Check out your portfolio center.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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