Correlation Between Jackson Financial and American Express
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and American Express 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 Jackson Financial and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and American Express, you can compare the effects of market volatilities on Jackson Financial and American Express 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 Jackson Financial with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and American Express.
Diversification Opportunities for Jackson Financial and American Express
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jackson and American is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Jackson Financial 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 Jackson Financial are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Jackson Financial i.e., Jackson Financial and American Express go up and down completely randomly.
Pair Corralation between Jackson Financial and American Express
Assuming the 90 days trading horizon Jackson Financial is expected to generate 2.71 times less return on investment than American Express. But when comparing it to its historical volatility, Jackson Financial is 1.44 times less risky than American Express. It trades about 0.05 of its potential returns per unit of risk. American Express is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15,339 in American Express on September 3, 2024 and sell it today you would earn a total of 15,129 from holding American Express or generate 98.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.89% |
| Values | Daily Returns |
Jackson Financial vs. American Express
Performance |
| Timeline |
| Jackson Financial |
| American Express |
Jackson Financial and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and American Express
The main advantage of trading using opposite Jackson Financial and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Jackson Financial vs. Analog Devices | Jackson Financial vs. Tencent Music Entertainment | Jackson Financial vs. RBC Bearings Incorporated | Jackson Financial vs. BioNTech SE |
| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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