Correlation Between TechnipFMC PLC and Jackson Financial

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

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

Diversification Opportunities for TechnipFMC PLC and Jackson Financial

0.55

Correlation Coefficient

TechnipFMC PLC  Jackson Financial

Very weak diversification

The 3 months correlation between TechnipFMC and Jackson is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and TechnipFMC PLC 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 TechnipFMC PLC 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 TechnipFMC PLC i.e., TechnipFMC PLC and Jackson Financial go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and Jackson Financial

Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 4.2 times more return on investment than Jackson Financial. However, TechnipFMC PLC is 4.2 times more volatile than Jackson Financial. It trades about 0.18 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.12 per unit of risk. If you would invest  2,515  in TechnipFMC PLC on September 5, 2024 and sell it today you would earn a total of  637.00  from holding TechnipFMC PLC or generate 25.33% return on investment over 90 days.

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

TechnipFMC PLC  vs.  Jackson Financial

TechnipFMC PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, TechnipFMC PLC demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Jackson Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 9 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TechnipFMC PLC and Jackson Financial

The main advantage of trading using opposite TechnipFMC PLC and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC 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 TechnipFMC PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.