Correlation Between MetLife and Jackson Financial

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Can any of the company-specific risk be diversified away by investing in both MetLife 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 MetLife and Jackson Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and Jackson Financial, you can compare the effects of market volatilities on MetLife 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 MetLife with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Jackson Financial.

Diversification Opportunities for MetLife and Jackson Financial

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between MetLife and Jackson is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and MetLife 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 MetLife 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 MetLife i.e., MetLife and Jackson Financial go up and down completely randomly.

Pair Corralation between MetLife and Jackson Financial

Considering the 90-day investment horizon MetLife is expected to generate 0.62 times more return on investment than Jackson Financial. However, MetLife is 1.62 times less risky than Jackson Financial. It trades about 0.28 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.12 per unit of risk. If you would invest  8,171  in MetLife on October 22, 2024 and sell it today you would earn a total of  507.00  from holding MetLife or generate 6.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MetLife  vs.  Jackson Financial

 Performance 
       Timeline  
MetLife 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MetLife is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Jackson Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jackson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jackson Financial is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

MetLife and Jackson Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MetLife and Jackson Financial

The main advantage of trading using opposite MetLife and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife 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.
The idea behind MetLife and Jackson Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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