Correlation Between Pfizer and First Trust

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

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

Diversification Opportunities for Pfizer and First Trust

0.55

Correlation Coefficient

Pfizer  First Trust

Very weak diversification

The 3 months correlation between Pfizer and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Indxx has no effect on the direction of Pfizer i.e., Pfizer and First Trust go up and down completely randomly.

Pair Corralation between Pfizer and First Trust

Considering the 90-day investment horizon Pfizer is expected to generate 1.47 times less return on investment than First Trust. In addition to that, Pfizer is 2.2 times more volatile than First Trust Indxx. It trades about 0.09 of its total potential returns per unit of risk. First Trust Indxx is currently generating about 0.28 per unit of volatility. If you would invest  4,824  in First Trust Indxx on April 29, 2025 and sell it today you would earn a total of  620.00  from holding First Trust Indxx or generate 12.85% return on investment over 90 days.

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

Pfizer Inc  vs.  First Trust Indxx

Pfizer Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust Indxx

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Indxx are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Pfizer and First Trust

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

The idea behind Pfizer Inc and First Trust Indxx 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.