Correlation Between Pfizer and MetLife
Can any of the company-specific risk be diversified away by investing in both Pfizer and MetLife 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 MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and MetLife, you can compare the effects of market volatilities on Pfizer and MetLife 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 MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and MetLife.
Diversification Opportunities for Pfizer and MetLife
Very good diversification
The 3 months correlation between Pfizer and MetLife is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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 MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Pfizer i.e., Pfizer and MetLife go up and down completely randomly.
Pair Corralation between Pfizer and MetLife
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the MetLife. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.02 times less risky than MetLife. The stock trades about -0.01 of its potential returns per unit of risk. The MetLife is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,012 in MetLife on September 3, 2024 and sell it today you would earn a total of 1,811 from holding MetLife or generate 25.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. MetLife
Performance |
| Timeline |
| Pfizer Inc |
| MetLife |
Pfizer and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and MetLife
The main advantage of trading using opposite Pfizer and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.| Pfizer vs. Merck Company | Pfizer vs. Johnson Johnson | Pfizer vs. Highway Holdings Limited | Pfizer vs. QCR Holdings |
| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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