Correlation Between Dupont De and Jackson Financial

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

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

Diversification Opportunities for Dupont De and Jackson Financial

0.44

Correlation Coefficient

Dupont De  Jackson Financial

Very weak diversification

The 3 months correlation between Dupont and Jackson is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Jackson Financial go up and down completely randomly.

Pair Corralation between Dupont De and Jackson Financial

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.11 times less return on investment than Jackson Financial. In addition to that, Dupont De is 2.61 times more volatile than Jackson Financial. It trades about 0.03 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	Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Jackson Financial

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Dupont De and Jackson Financial

The main advantage of trading using opposite Dupont De and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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 Dupont De Nemours 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..