Correlation Between Jackson Financial and China Life
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and China Life 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 China Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and China Life Insurance, you can compare the effects of market volatilities on Jackson Financial and China Life 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 China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and China Life.
Diversification Opportunities for Jackson Financial and China Life
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jackson and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance 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 China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Jackson Financial i.e., Jackson Financial and China Life go up and down completely randomly.
Pair Corralation between Jackson Financial and China Life
Assuming the 90 days trading horizon Jackson Financial is expected to generate 4.29 times less return on investment than China Life. But when comparing it to its historical volatility, Jackson Financial is 6.18 times less risky than China Life. It trades about 0.09 of its potential returns per unit of risk. China Life Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 121.00 in China Life Insurance on September 2, 2024 and sell it today you would earn a total of 69.00 from holding China Life Insurance or generate 57.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Jackson Financial vs. China Life Insurance
Performance |
| Timeline |
| Jackson Financial |
| China Life Insurance |
Jackson Financial and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and China Life
The main advantage of trading using opposite Jackson Financial and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, China Life 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 China Life will offset losses from the drop in China Life's long position.| Jackson Financial vs. FG Annuities Life | Jackson Financial vs. Globe Life | Jackson Financial vs. MetLife Preferred Stock | Jackson Financial vs. MetLife Preferred Stock |
| China Life vs. CNO Financial Group | China Life vs. Ping An Insurance | China Life vs. Lincoln National | China Life vs. AIA Group Ltd |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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