Correlation Between Pfizer and IShares SP
Can any of the company-specific risk be diversified away by investing in both Pfizer and IShares SP 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 SP 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 SP 500, you can compare the effects of market volatilities on Pfizer and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and IShares SP.
Diversification Opportunities for Pfizer and IShares SP
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Pfizer i.e., Pfizer and IShares SP go up and down completely randomly.
Pair Corralation between Pfizer and IShares SP
Considering the 90-day investment horizon Pfizer Inc is expected to generate 2.8 times more return on investment than IShares SP. However, Pfizer is 2.8 times more volatile than iShares SP 500. It trades about 0.19 of its potential returns per unit of risk. iShares SP 500 is currently generating about -0.23 per unit of risk. If you would invest 2,486 in Pfizer Inc on September 18, 2024 and sell it today you would earn a total of 156.50 from holding Pfizer Inc or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. iShares SP 500
Performance |
| Timeline |
| Pfizer Inc |
| iShares SP 500 |
Pfizer and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and IShares SP
The main advantage of trading using opposite Pfizer and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.| Pfizer vs. Emergent Biosolutions | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries | Pfizer vs. Haleon plc |
| IShares SP vs. iShares SP 500 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid Cap |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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