Correlation Between Jackson Financial and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and Procter Gamble 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 Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and Procter Gamble, you can compare the effects of market volatilities on Jackson Financial and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and Procter Gamble.
Diversification Opportunities for Jackson Financial and Procter Gamble
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jackson and Procter is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Jackson Financial i.e., Jackson Financial and Procter Gamble go up and down completely randomly.
Pair Corralation between Jackson Financial and Procter Gamble
Assuming the 90 days trading horizon Jackson Financial is expected to generate 0.55 times more return on investment than Procter Gamble. However, Jackson Financial is 1.83 times less risky than Procter Gamble. It trades about 0.18 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.06 per unit of risk. If you would invest 2,592 in Jackson Financial on September 3, 2024 and sell it today you would earn a total of 155.00 from holding Jackson Financial or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jackson Financial vs. Procter Gamble
Performance |
| Timeline |
| Jackson Financial |
| Procter Gamble |
Jackson Financial and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and Procter Gamble
The main advantage of trading using opposite Jackson Financial and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| Jackson Financial vs. Analog Devices | Jackson Financial vs. Tencent Music Entertainment | Jackson Financial vs. RBC Bearings Incorporated | Jackson Financial vs. BioNTech SE |
| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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