Correlation Between Pfizer and SPDR FactSet
Can any of the company-specific risk be diversified away by investing in both Pfizer and SPDR FactSet 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 SPDR FactSet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and SPDR FactSet Innovative, you can compare the effects of market volatilities on Pfizer and SPDR FactSet 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 SPDR FactSet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and SPDR FactSet.
Diversification Opportunities for Pfizer and SPDR FactSet
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and SPDR is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative 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 SPDR FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of Pfizer i.e., Pfizer and SPDR FactSet go up and down completely randomly.
Pair Corralation between Pfizer and SPDR FactSet
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the SPDR FactSet. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.07 times less risky than SPDR FactSet. The stock trades about -0.22 of its potential returns per unit of risk. The SPDR FactSet Innovative is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 16,097 in SPDR FactSet Innovative on August 30, 2024 and sell it today you would earn a total of 1,934 from holding SPDR FactSet Innovative or generate 12.01% 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. SPDR FactSet Innovative
Performance |
| Timeline |
| Pfizer Inc |
| SPDR FactSet Innovative |
Pfizer and SPDR FactSet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and SPDR FactSet
The main advantage of trading using opposite Pfizer and SPDR FactSet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, SPDR FactSet 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 SPDR FactSet will offset losses from the drop in SPDR FactSet's long position.| Pfizer vs. Emergent Biosolutions | Pfizer vs. Bausch Health Companies | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries |
| SPDR FactSet vs. SPDR SP Software | SPDR FactSet vs. SPDR Morgan Stanley | SPDR FactSet vs. SPDR SP Health |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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