Correlation Between Pfizer and Biogen

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

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

Diversification Opportunities for Pfizer and Biogen

0.48

Correlation Coefficient

Pfizer  Biogen

Very weak diversification

The 3 months correlation between Pfizer and Biogen is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Pfizer i.e., Pfizer and Biogen go up and down completely randomly.

Pair Corralation between Pfizer and Biogen

Considering the 90-day investment horizon Pfizer is expected to generate 1.99 times less return on investment than Biogen. But when comparing it to its historical volatility, Pfizer Inc is 1.29 times less risky than Biogen. It trades about 0.04 of its potential returns per unit of risk. Biogen Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12,108  in Biogen Inc on April 30, 2025 and sell it today you would earn a total of  820.00  from holding Biogen Inc or generate 6.77% return on investment over 90 days.

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

Pfizer Inc  vs.  Biogen Inc

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Biogen Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biogen Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Biogen may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Pfizer and Biogen

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

The idea behind Pfizer Inc and Biogen 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 Global Correlations module to find global opportunities by holding instruments from different markets.