Correlation Between Jackson Financial and Unum
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and Unum 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 Unum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and Unum Group, you can compare the effects of market volatilities on Jackson Financial and Unum 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 Unum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and Unum.
Diversification Opportunities for Jackson Financial and Unum
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jackson and Unum is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group 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 Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Jackson Financial i.e., Jackson Financial and Unum go up and down completely randomly.
Pair Corralation between Jackson Financial and Unum
Assuming the 90 days trading horizon Jackson Financial is expected to under-perform the Unum. But the preferred stock apears to be less risky and, when comparing its historical volatility, Jackson Financial is 4.63 times less risky than Unum. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Unum Group is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 6,185 in Unum Group on August 28, 2024 and sell it today you would earn a total of 1,436 from holding Unum Group or generate 23.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jackson Financial vs. Unum Group
Performance |
| Timeline |
| Jackson Financial |
| Unum Group |
Jackson Financial and Unum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and Unum
The main advantage of trading using opposite Jackson Financial and Unum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, Unum 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 Unum will offset losses from the drop in Unum's long position.| Jackson Financial vs. MetLife Preferred Stock | Jackson Financial vs. MetLife Preferred Stock | Jackson Financial vs. Brighthouse Financial |
| Unum vs. Morningstar Unconstrained Allocation | Unum vs. Via Renewables | Unum vs. Sitka Gold Corp | Unum vs. MSCI ACWI exAUCONSUMER |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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