Correlation Between Pfizer and Alpha Architect

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

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

Diversification Opportunities for Pfizer and Alpha Architect

0.79

Correlation Coefficient

Pfizer  Alpha Architect

Poor diversification

The 3 months correlation between Pfizer and Alpha is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Alpha Architect High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect High 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 Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect High has no effect on the direction of Pfizer i.e., Pfizer and Alpha Architect go up and down completely randomly.

Pair Corralation between Pfizer and Alpha Architect

Considering the 90-day investment horizon Pfizer Inc is expected to generate 7.13 times more return on investment than Alpha Architect. However, Pfizer is 7.13 times more volatile than Alpha Architect High. It trades about 0.02 of its potential returns per unit of risk. Alpha Architect High is currently generating about 0.04 per unit of risk. If you would invest  2,303  in Pfizer Inc on May 3, 2025 and sell it today you would earn a total of  26.00  from holding Pfizer Inc or generate 1.13% 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.  Alpha Architect High

Pfizer Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 1 (%) 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.

Alpha Architect High

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Pfizer and Alpha Architect

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

The idea behind Pfizer Inc and Alpha Architect High 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.