Correlation Between Jackson Financial and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and Cisco Systems 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 Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and Cisco Systems, you can compare the effects of market volatilities on Jackson Financial and Cisco Systems 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 Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and Cisco Systems.
Diversification Opportunities for Jackson Financial and Cisco Systems
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jackson and Cisco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems 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 Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of Jackson Financial i.e., Jackson Financial and Cisco Systems go up and down completely randomly.
Pair Corralation between Jackson Financial and Cisco Systems
Assuming the 90 days trading horizon Jackson Financial is expected to generate 3.04 times less return on investment than Cisco Systems. But when comparing it to its historical volatility, Jackson Financial is 1.98 times less risky than Cisco Systems. It trades about 0.18 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,968 in Cisco Systems on September 3, 2024 and sell it today you would earn a total of 953.00 from holding Cisco Systems or generate 19.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jackson Financial vs. Cisco Systems
Performance |
| Timeline |
| Jackson Financial |
| Cisco Systems |
Jackson Financial and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and Cisco Systems
The main advantage of trading using opposite Jackson Financial and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, Cisco Systems 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 Cisco Systems will offset losses from the drop in Cisco Systems' long position.| Jackson Financial vs. Analog Devices | Jackson Financial vs. Tencent Music Entertainment | Jackson Financial vs. RBC Bearings Incorporated | Jackson Financial vs. BioNTech SE |
| Cisco Systems vs. Highway Holdings Limited | Cisco Systems vs. QCR Holdings | Cisco Systems vs. Partner Communications | Cisco Systems 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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