Correlation Between NYSE Composite and Jackson Financial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Jackson Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Jackson Financial, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Jackson Financial.
Diversification Opportunities for NYSE Composite and Jackson Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Jackson is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Jackson Financial go up and down completely randomly.
Pair Corralation between NYSE Composite and Jackson Financial
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.78 times less return on investment than Jackson Financial. But when comparing it to its historical volatility, NYSE Composite is 3.48 times less risky than Jackson Financial. It trades about 0.08 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,205 in Jackson Financial on August 24, 2024 and sell it today you would earn a total of 6,983 from holding Jackson Financial or generate 217.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Jackson Financial
Performance |
| Timeline |
NYSE Composite and Jackson Financial Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Jackson Financial
Pair trading matchups for Jackson Financial
Pair Trading with NYSE Composite and Jackson Financial
The main advantage of trading using opposite NYSE Composite and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Jackson Financial vs. Manulife Financial Corp | Jackson Financial vs. Brighthouse Financial | Jackson Financial vs. FG Annuities Life | Jackson Financial vs. Jackson Financial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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