Correlation Between Brookfield Corp and Jackson Financial

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

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

Diversification Opportunities for Brookfield Corp and Jackson Financial

0.83

Correlation Coefficient

Brookfield Corp  Jackson Financial

Very poor diversification

The 3 months correlation between Brookfield and Jackson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Brookfield Corp 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 Brookfield Corp 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 Brookfield Corp i.e., Brookfield Corp and Jackson Financial go up and down completely randomly.

Pair Corralation between Brookfield Corp and Jackson Financial

Allowing for the 90-day total investment horizon Brookfield Corp is expected to under-perform the Jackson Financial. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Corp is 1.21 times less risky than Jackson Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Jackson Financial is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  8,587  in Jackson Financial on December 30, 2024 and sell it today you would lose (274.00) from holding Jackson Financial or give up 3.19% of portfolio value over 90 days.

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

Brookfield Corp  vs.  Jackson Financial

Brookfield Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Jackson Financial

Risk-Adjusted Performance

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.

Pair Trading with Brookfield Corp and Jackson Financial

The main advantage of trading using opposite Brookfield Corp and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Corp 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 Brookfield Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.