Correlation Between Jackson Financial and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and Prudential Financial 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 Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and Prudential Financial, you can compare the effects of market volatilities on Jackson Financial and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and Prudential Financial.
Diversification Opportunities for Jackson Financial and Prudential Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jackson and Prudential is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Jackson Financial i.e., Jackson Financial and Prudential Financial go up and down completely randomly.
Pair Corralation between Jackson Financial and Prudential Financial
Considering the 90-day investment horizon Jackson Financial is expected to generate 1.72 times more return on investment than Prudential Financial. However, Jackson Financial is 1.72 times more volatile than Prudential Financial. It trades about 0.1 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.05 per unit of risk. If you would invest 3,235 in Jackson Financial on August 28, 2024 and sell it today you would earn a total of 7,086 from holding Jackson Financial or generate 219.04% 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. Prudential Financial
Performance |
| Timeline |
| Jackson Financial |
| Prudential Financial |
Jackson Financial and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and Prudential Financial
The main advantage of trading using opposite Jackson Financial and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Jackson Financial vs. Prudential Financial | Jackson Financial vs. MetLife | Jackson Financial vs. Unum Group | Jackson Financial vs. Manulife Financial Corp |
| Prudential Financial vs. Morningstar Unconstrained Allocation | Prudential Financial vs. Via Renewables | Prudential Financial vs. Sitka Gold Corp | Prudential Financial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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