Correlation Between Pfizer and Tree Island

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

By analyzing existing cross correlation between Pfizer Inc CDR and Tree Island Steel, you can compare the effects of market volatilities on Pfizer and Tree Island 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 Tree Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Tree Island.

Diversification Opportunities for Pfizer and Tree Island

0.6

Correlation Coefficient

Pfizer  Tree Island

Poor diversification

The 3 months correlation between Pfizer and Tree is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel 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 CDR are associated (or correlated) with Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of Pfizer i.e., Pfizer and Tree Island go up and down completely randomly.

Pair Corralation between Pfizer and Tree Island

Assuming the 90 days trading horizon Pfizer Inc CDR is expected to generate 1.18 times more return on investment than Tree Island. However, Pfizer is 1.18 times more volatile than Tree Island Steel. It trades about 0.12 of its potential returns per unit of risk. Tree Island Steel is currently generating about 0.02 per unit of risk. If you would invest  1,067  in Pfizer Inc CDR on May 26, 2025 and sell it today you would earn a total of  114.00  from holding Pfizer Inc CDR or generate 10.68% return on investment over 90 days.

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

Pfizer Inc CDR  vs.  Tree Island Steel

Pfizer Inc CDR

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Tree Island Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tree Island Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Tree Island is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and Tree Island

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

The idea behind Pfizer Inc CDR and Tree Island Steel 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.