Correlation Between Jackson Financial and MetLife
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and MetLife 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 MetLife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and MetLife, you can compare the effects of market volatilities on Jackson Financial and MetLife 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 MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and MetLife.
Diversification Opportunities for Jackson Financial and MetLife
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jackson and MetLife is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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 MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Jackson Financial i.e., Jackson Financial and MetLife go up and down completely randomly.
Pair Corralation between Jackson Financial and MetLife
Considering the 90-day investment horizon Jackson Financial is expected to generate 1.9 times less return on investment than MetLife. In addition to that, Jackson Financial is 1.76 times more volatile than MetLife. It trades about 0.04 of its total potential returns per unit of risk. MetLife is currently generating about 0.13 per unit of volatility. If you would invest 8,251 in MetLife on August 28, 2024 and sell it today you would earn a total of 483.00 from holding MetLife or generate 5.85% 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. MetLife
Performance |
Timeline |
Jackson Financial |
MetLife |
Jackson Financial and MetLife Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jackson Financial and MetLife
The main advantage of trading using opposite Jackson Financial and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.Jackson Financial vs. Prudential Financial | Jackson Financial vs. MetLife | Jackson Financial vs. Unum Group | Jackson Financial vs. Manulife Financial Corp |
MetLife vs. Morningstar Unconstrained Allocation | MetLife vs. Via Renewables | MetLife vs. Sitka Gold Corp | MetLife 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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