Correlation Between Pfizer and IShares Russell
Can any of the company-specific risk be diversified away by investing in both Pfizer and IShares Russell 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 Russell 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 Russell 2000, you can compare the effects of market volatilities on Pfizer and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and IShares Russell.
Diversification Opportunities for Pfizer and IShares Russell
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and IShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 2000 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 2000 has no effect on the direction of Pfizer i.e., Pfizer and IShares Russell go up and down completely randomly.
Pair Corralation between Pfizer and IShares Russell
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the IShares Russell. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.01 times less risky than IShares Russell. The stock trades about -0.21 of its potential returns per unit of risk. The iShares Russell 2000 is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 22,174 in iShares Russell 2000 on August 30, 2024 and sell it today you would earn a total of 1,921 from holding iShares Russell 2000 or generate 8.66% 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 Russell 2000
Performance |
| Timeline |
| Pfizer Inc |
| iShares Russell 2000 |
Pfizer and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and IShares Russell
The main advantage of trading using opposite Pfizer and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.| Pfizer vs. Emergent Biosolutions | Pfizer vs. Bausch Health Companies | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries |
| IShares Russell vs. SPDR Dow Jones | IShares Russell vs. iShares MSCI Emerging | IShares Russell vs. Financial Select Sector | IShares Russell vs. SPDR SP 500 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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