Correlation Between Jackson Financial and McDonalds
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and McDonalds 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 McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and McDonalds, you can compare the effects of market volatilities on Jackson Financial and McDonalds 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 McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and McDonalds.
Diversification Opportunities for Jackson Financial and McDonalds
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jackson and McDonalds is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds 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 McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Jackson Financial i.e., Jackson Financial and McDonalds go up and down completely randomly.
Pair Corralation between Jackson Financial and McDonalds
Assuming the 90 days trading horizon Jackson Financial is expected to generate 1.09 times more return on investment than McDonalds. However, Jackson Financial is 1.09 times more volatile than McDonalds. It trades about 0.05 of its potential returns per unit of risk. McDonalds is currently generating about 0.03 per unit of risk. If you would invest 2,208 in Jackson Financial on September 5, 2024 and sell it today you would earn a total of 527.00 from holding Jackson Financial or generate 23.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.29% |
| Values | Daily Returns |
Jackson Financial vs. McDonalds
Performance |
| Timeline |
| Jackson Financial |
| McDonalds |
Jackson Financial and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and McDonalds
The main advantage of trading using opposite Jackson Financial and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, McDonalds 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 McDonalds will offset losses from the drop in McDonalds' long position.| Jackson Financial vs. NRG Energy | Jackson Financial vs. United Utilities Group | Jackson Financial vs. Aris Water Solutions | Jackson Financial vs. Western Midstream Partners |
| McDonalds vs. Hyatt Hotels | McDonalds vs. Smart Share Global | McDonalds vs. Sweetgreen | McDonalds vs. Wyndham Hotels Resorts |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |