Correlation Between Pfizer and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both Pfizer and WisdomTree Emerging 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 WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and WisdomTree Emerging Markets, you can compare the effects of market volatilities on Pfizer and WisdomTree Emerging 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 WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and WisdomTree Emerging.
Diversification Opportunities for Pfizer and WisdomTree Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and WisdomTree is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging 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 WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of Pfizer i.e., Pfizer and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between Pfizer and WisdomTree Emerging
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the WisdomTree Emerging. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.05 times less risky than WisdomTree Emerging. The stock trades about -0.38 of its potential returns per unit of risk. The WisdomTree Emerging Markets is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,625 in WisdomTree Emerging Markets on January 12, 2025 and sell it today you would lose (65.00) from holding WisdomTree Emerging Markets or give up 2.48% 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. WisdomTree Emerging Markets
Performance |
| Timeline |
| Pfizer Inc |
| WisdomTree Emerging |
Pfizer and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and WisdomTree Emerging
The main advantage of trading using opposite Pfizer and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, WisdomTree Emerging 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 WisdomTree Emerging will offset losses from the drop in WisdomTree Emerging's long position.| Pfizer vs. AbbVie Inc | Pfizer vs. Merck Company | Pfizer vs. Eli Lilly and | Pfizer vs. Bristol Myers Squibb |
| WisdomTree Emerging vs. SPDR MSCI EAFE | WisdomTree Emerging vs. SPDR MSCI World | WisdomTree Emerging vs. SPDR MSCI USA | WisdomTree Emerging vs. SPDR MSCI Emerging |
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 Stocks Directory module to find actively traded stocks across global markets.
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