Correlation Between Pfizer and WisdomTree China

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

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

Diversification Opportunities for Pfizer and WisdomTree China

0.65

Correlation Coefficient

Pfizer  WisdomTree China

Poor diversification

The 3 months correlation between Pfizer and WisdomTree is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of Pfizer i.e., Pfizer and WisdomTree China go up and down completely randomly.

Pair Corralation between Pfizer and WisdomTree China

Considering the 90-day investment horizon Pfizer is expected to generate 4.6 times less return on investment than WisdomTree China. In addition to that, Pfizer is 1.31 times more volatile than WisdomTree China ex State Owned. It trades about 0.03 of its total potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about 0.17 per unit of volatility. If you would invest  3,308  in WisdomTree China ex State Owned on May 2, 2025 and sell it today you would earn a total of  424.00  from holding WisdomTree China ex State Owned or generate 12.82% return on investment over 90 days.

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

Pfizer Inc  vs.  WisdomTree China ex State Owne

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

WisdomTree China

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree China ex State Owned are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, WisdomTree China exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and WisdomTree China

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

The idea behind Pfizer Inc and WisdomTree China ex State Owned 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.

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 the Fundamental Analysis module to view fundamental data based on most recent published financial statements.