Correlation Between American Express and Jackson Financial
Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and Jackson Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Jackson Financial, you can compare the effects of market volatilities on American Express 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 American Express with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Jackson Financial.
Diversification Opportunities for American Express and Jackson Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Jackson is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and American Express 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 American Express 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 American Express i.e., American Express and Jackson Financial go up and down completely randomly.
Pair Corralation between American Express and Jackson Financial
Considering the 90-day investment horizon American Express is expected to generate 2.29 times more return on investment than Jackson Financial. However, American Express is 2.29 times more volatile than Jackson Financial. It trades about 0.11 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.1 per unit of risk. If you would invest 17,030 in American Express on September 4, 2024 and sell it today you would earn a total of 13,196 from holding American Express or generate 77.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Jackson Financial
Performance |
| Timeline |
| American Express |
| Jackson Financial |
American Express and Jackson Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Jackson Financial
The main advantage of trading using opposite American Express and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Enova International | American Express vs. X Financial Class |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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