Correlation Between Alcoa Corp and Jackson Financial
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Jackson Financial 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 Alcoa Corp and Jackson Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Jackson Financial, you can compare the effects of market volatilities on Alcoa Corp and Jackson Financial 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 Alcoa Corp with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Jackson Financial.
Diversification Opportunities for Alcoa Corp and Jackson Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and Jackson is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Alcoa Corp 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 Alcoa Corp are associated (or correlated) with Jackson Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Financial has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Jackson Financial go up and down completely randomly.
Pair Corralation between Alcoa Corp and Jackson Financial
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 2.88 times more return on investment than Jackson Financial. However, Alcoa Corp is 2.88 times more volatile than Jackson Financial. It trades about 0.02 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.05 per unit of risk. If you would invest 4,226 in Alcoa Corp on September 5, 2024 and sell it today you would earn a total of 364.00 from holding Alcoa Corp or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 89.29% |
| Values | Daily Returns |
Alcoa Corp vs. Jackson Financial
Performance |
| Timeline |
| Alcoa Corp |
| Jackson Financial |
Alcoa Corp and Jackson Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Jackson Financial
The main advantage of trading using opposite Alcoa Corp and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Jackson Financial 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 Jackson Financial will offset losses from the drop in Jackson Financial's long position.| Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
| Jackson Financial vs. NRG Energy | Jackson Financial vs. United Utilities Group | Jackson Financial vs. Aris Water Solutions | Jackson Financial vs. Western Midstream Partners |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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