Correlation Between Pfizer and John Hancock

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

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

Diversification Opportunities for Pfizer and John Hancock

-0.9

Correlation Coefficient

Pfizer  John Hancock

Pay attention - limited upside

The 3 months correlation between Pfizer and John is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial 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 John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Financial has no effect on the direction of Pfizer i.e., Pfizer and John Hancock go up and down completely randomly.

Pair Corralation between Pfizer and John Hancock

Considering the 90-day investment horizon Pfizer Inc is expected to generate 1.48 times more return on investment than John Hancock. However, Pfizer is 1.48 times more volatile than John Hancock Financial. It trades about 0.12 of its potential returns per unit of risk. John Hancock Financial is currently generating about -0.01 per unit of risk. If you would invest  2,480  in Pfizer Inc on September 16, 2024 and sell it today you would earn a total of  78.00  from holding Pfizer Inc or generate 3.15% return on investment over 90 days.

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

Pfizer Inc  vs.  John Hancock Financial

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

John Hancock Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and John Hancock

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

The idea behind Pfizer Inc and John Hancock Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.