Correlation Between Pfizer and Invesco FTSE

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

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

Diversification Opportunities for Pfizer and Invesco FTSE

0.82

Correlation Coefficient

Pfizer  Invesco FTSE

Very poor diversification

The 3 months correlation between Pfizer and Invesco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI 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 Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of Pfizer i.e., Pfizer and Invesco FTSE go up and down completely randomly.

Pair Corralation between Pfizer and Invesco FTSE

Considering the 90-day investment horizon Pfizer is expected to generate 2.44 times less return on investment than Invesco FTSE. In addition to that, Pfizer is 2.14 times more volatile than Invesco FTSE RAFI. It trades about 0.03 of its total potential returns per unit of risk. Invesco FTSE RAFI is currently generating about 0.15 per unit of volatility. If you would invest  3,941  in Invesco FTSE RAFI on May 5, 2025 and sell it today you would earn a total of  263.00  from holding Invesco FTSE RAFI or generate 6.67% return on investment over 90 days.

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

Pfizer Inc  vs.  Invesco FTSE RAFI

Pfizer Inc

Risk-Adjusted Performance

Weak

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.

Invesco FTSE RAFI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco FTSE RAFI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Invesco FTSE may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Pfizer and Invesco FTSE

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

The idea behind Pfizer Inc and Invesco FTSE RAFI 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.