Correlation Between Pfizer and IShares Treasury

Can any of the company-specific risk be diversified away by investing in both Pfizer and IShares Treasury 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 Treasury 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 Treasury Floating, you can compare the effects of market volatilities on Pfizer and IShares Treasury 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 Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and IShares Treasury.

Diversification Opportunities for Pfizer and IShares Treasury

-0.49

Correlation Coefficient

Pfizer  IShares Treasury

Very good diversification

The 3 months correlation between Pfizer and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating 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 Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of Pfizer i.e., Pfizer and IShares Treasury go up and down completely randomly.

Pair Corralation between Pfizer and IShares Treasury

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the IShares Treasury. In addition to that, Pfizer is 65.38 times more volatile than iShares Treasury Floating. It trades about -0.09 of its total potential returns per unit of risk. iShares Treasury Floating is currently generating about 0.93 per unit of volatility. If you would invest  4,799  in iShares Treasury Floating on January 21, 2024 and sell it today you would earn a total of  261.00  from holding iShares Treasury Floating or generate 5.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Pfizer Inc  vs.  iShares Treasury Floating

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

iShares Treasury Floating

Risk-Adjusted Performance

83 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 83 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, IShares Treasury is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and IShares Treasury

The main advantage of trading using opposite Pfizer and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, IShares Treasury 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 Treasury will offset losses from the drop in IShares Treasury's long position.

The idea behind Pfizer Inc and iShares Treasury Floating 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.