Correlation Between BlackRock ESG and Pfizer

Can any of the company-specific risk be diversified away by investing in both BlackRock ESG 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 BlackRock ESG and Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock ESG Capital and Pfizer Inc, you can compare the effects of market volatilities on BlackRock ESG 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 BlackRock ESG with a short position of Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock ESG and Pfizer.

Diversification Opportunities for BlackRock ESG and Pfizer

0.41

Correlation Coefficient

BlackRock ESG  Pfizer

Very weak diversification

The 3 months correlation between BlackRock and Pfizer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Capital and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and BlackRock ESG 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 BlackRock ESG Capital 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 BlackRock ESG i.e., BlackRock ESG and Pfizer go up and down completely randomly.

Pair Corralation between BlackRock ESG and Pfizer

Given the investment horizon of 90 days BlackRock ESG Capital is expected to under-perform the Pfizer. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock ESG Capital is 1.61 times less risky than Pfizer. The stock trades about -0.13 of its potential returns per unit of risk. The Pfizer Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,589  in Pfizer Inc on February 1, 2024 and sell it today you would lose (27.00) from holding Pfizer Inc or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BlackRock ESG Capital  vs.  Pfizer Inc

BlackRock ESG Capital

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BlackRock ESG Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock ESG and Pfizer

The main advantage of trading using opposite BlackRock ESG and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock ESG 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.

The idea behind BlackRock ESG Capital 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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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.