Correlation Between Alliance Resource and Jackson Financial
Can any of the company-specific risk be diversified away by investing in both Alliance Resource 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 Alliance Resource and Jackson Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Resource Partners and Jackson Financial, you can compare the effects of market volatilities on Alliance Resource 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 Alliance Resource with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Resource and Jackson Financial.
Diversification Opportunities for Alliance Resource and Jackson Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and Jackson is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Resource Partners and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Alliance Resource 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 Alliance Resource Partners 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 Alliance Resource i.e., Alliance Resource and Jackson Financial go up and down completely randomly.
Pair Corralation between Alliance Resource and Jackson Financial
Given the investment horizon of 90 days Alliance Resource Partners is expected to generate 2.42 times more return on investment than Jackson Financial. However, Alliance Resource is 2.42 times more volatile than Jackson Financial. It trades about 0.12 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.1 per unit of risk. If you would invest 1,456 in Alliance Resource Partners on September 4, 2024 and sell it today you would earn a total of 1,324 from holding Alliance Resource Partners or generate 90.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Resource Partners vs. Jackson Financial
Performance |
| Timeline |
| Alliance Resource |
| Jackson Financial |
Alliance Resource and Jackson Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Resource and Jackson Financial
The main advantage of trading using opposite Alliance Resource and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Resource 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.| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource vs. NACCO Industries |
| Jackson Financial vs. Asure Software | Jackson Financial vs. Assurant | Jackson Financial vs. Sun Life Financial | Jackson Financial vs. GoHealth |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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