Correlation Between Lincoln National and Jackson Financial
Can any of the company-specific risk be diversified away by investing in both Lincoln National and Jackson 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 Lincoln National and Jackson Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln National and Jackson Financial, you can compare the effects of market volatilities on Lincoln National and Jackson 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 Lincoln National with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and Jackson Financial.
Diversification Opportunities for Lincoln National and Jackson Financial
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and Jackson is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Lincoln National 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 Lincoln National are associated (or correlated) with Jackson Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Financial has no effect on the direction of Lincoln National i.e., Lincoln National and Jackson Financial go up and down completely randomly.
Pair Corralation between Lincoln National and Jackson Financial
Considering the 90-day investment horizon Lincoln National is expected to generate 2.31 times more return on investment than Jackson Financial. However, Lincoln National is 2.31 times more volatile than Jackson Financial. It trades about 0.03 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.05 per unit of risk. If you would invest 2,723 in Lincoln National on August 31, 2024 and sell it today you would earn a total of 831.00 from holding Lincoln National or generate 30.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.84% |
| Values | Daily Returns |
Lincoln National vs. Jackson Financial
Performance |
| Timeline |
| Lincoln National |
| Jackson Financial |
Lincoln National and Jackson Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln National and Jackson Financial
The main advantage of trading using opposite Lincoln National and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National position performs unexpectedly, Jackson 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 Jackson Financial will offset losses from the drop in Jackson Financial's long position.| Lincoln National vs. MetLife | Lincoln National vs. Aflac Incorporated | Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial Corp |
| Jackson Financial vs. FG Annuities Life | Jackson Financial vs. Globe Life | Jackson Financial vs. MetLife Preferred Stock | Jackson Financial vs. MetLife Preferred Stock |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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