Correlation Between Pfizer and IShares Europe
Can any of the company-specific risk be diversified away by investing in both Pfizer and IShares Europe 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 IShares Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and iShares Europe ETF, you can compare the effects of market volatilities on Pfizer and IShares Europe 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 IShares Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and IShares Europe.
Diversification Opportunities for Pfizer and IShares Europe
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pfizer and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Europe ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Europe ETF 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 IShares Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Europe ETF has no effect on the direction of Pfizer i.e., Pfizer and IShares Europe go up and down completely randomly.
Pair Corralation between Pfizer and IShares Europe
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the IShares Europe. In addition to that, Pfizer is 1.73 times more volatile than iShares Europe ETF. It trades about -0.28 of its total potential returns per unit of risk. iShares Europe ETF is currently generating about -0.27 per unit of volatility. If you would invest 5,590 in iShares Europe ETF on August 24, 2024 and sell it today you would lose (306.00) from holding iShares Europe ETF or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. iShares Europe ETF
Performance |
| Timeline |
| Pfizer Inc |
| iShares Europe ETF |
Pfizer and IShares Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and IShares Europe
The main advantage of trading using opposite Pfizer and IShares Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, IShares Europe 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 IShares Europe will offset losses from the drop in IShares Europe's long position.| Pfizer vs. Merck Company | Pfizer vs. Johnson Johnson | Pfizer vs. Eshallgo Class A | Pfizer vs. Amtech Systems |
| IShares Europe vs. WisdomTree Europe Hedged | IShares Europe vs. WisdomTree International Hedged | IShares Europe vs. WisdomTree Emerging Markets | IShares Europe vs. ProShares MSCI Europe |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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