Correlation Between Analog Devices and Jackson Financial

Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and Jackson Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Analog Devices and Jackson Financial, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Jackson Financial.

Diversification Opportunities for Analog Devices and Jackson Financial

0.04

Correlation Coefficient

Analog Devices  Jackson Financial

Significant diversification

The 3 months correlation between Analog and Jackson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Jackson Financial go up and down completely randomly.

Pair Corralation between Analog Devices and Jackson Financial

Considering the 90-day investment horizon Analog Devices is expected to generate 7.68 times less return on investment than Jackson Financial. In addition to that, Analog Devices is 3.56 times more volatile than Jackson Financial. It trades about 0.01 of its total potential returns per unit of risk. Jackson Financial is currently generating about 0.18 per unit of volatility. If you would invest  2,592  in Jackson Financial on September 3, 2024 and sell it today you would earn a total of  155.00  from holding Jackson Financial or generate 5.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Analog Devices  vs.  Jackson Financial

Analog Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Jackson Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jackson Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Analog Devices and Jackson Financial

The main advantage of trading using opposite Analog Devices and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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 Analog Devices 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.