Correlation Between Dfa International and Pfizer

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Can any of the company-specific risk be diversified away by investing in both Dfa International and Pfizer 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 Dfa International and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa International Small and Pfizer Inc, you can compare the effects of market volatilities on Dfa International and Pfizer 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 Dfa International with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa International and Pfizer.

Diversification Opportunities for Dfa International and Pfizer

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between DISVX and Pfizer is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International Small and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Dfa International 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 Dfa International Small are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Dfa International i.e., Dfa International and Pfizer go up and down completely randomly.

Pair Corralation between Dfa International and Pfizer

Assuming the 90 days horizon Dfa International Small is expected to under-perform the Pfizer. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dfa International Small is 1.39 times less risky than Pfizer. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Pfizer Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,708  in Pfizer Inc on September 1, 2022 and sell it today you would earn a total of  305.00  from holding Pfizer Inc or generate 6.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Dfa International Small  vs.  Pfizer Inc

 Performance (%) 
       Timeline  
Dfa International Small 
DISVX Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dfa International Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dfa International may actually be approaching a critical reversion point that can send shares even higher in December 2022.

DISVX Price Channel

Pfizer Inc 
Pfizer Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Pfizer Price Channel

Dfa International and Pfizer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dfa International and Pfizer

The main advantage of trading using opposite Dfa International and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa International position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.
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The idea behind Dfa International Small and Pfizer Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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