Correlation Between Pfizer and SPDR SP

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

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

Diversification Opportunities for Pfizer and SPDR SP

0.81

Correlation Coefficient

Pfizer  SPDR SP

Very poor diversification

The 3 months correlation between Pfizer and SPDR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of Pfizer i.e., Pfizer and SPDR SP go up and down completely randomly.

Pair Corralation between Pfizer and SPDR SP

Considering the 90-day investment horizon Pfizer Inc is expected to generate 2.28 times more return on investment than SPDR SP. However, Pfizer is 2.28 times more volatile than SPDR SP Global. It trades about 0.13 of its potential returns per unit of risk. SPDR SP Global is currently generating about 0.22 per unit of risk. If you would invest  2,163  in Pfizer Inc on April 20, 2025 and sell it today you would earn a total of  284.00  from holding Pfizer Inc or generate 13.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Pfizer Inc  vs.  SPDR SP Global

Pfizer Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Pfizer exhibited solid returns over the last few months and may actually be approaching a breakup point.

SPDR SP Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Global are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Pfizer and SPDR SP

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

The idea behind Pfizer Inc and SPDR SP Global 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.