Correlation Between Jackson Financial and Alsea SAB

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

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

Diversification Opportunities for Jackson Financial and Alsea SAB

0.2

Correlation Coefficient

Jackson Financial  Alsea SAB

Modest diversification

The 3 months correlation between Jackson and Alsea is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de and Jackson Financial 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 Jackson Financial are associated (or correlated) with Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of Jackson Financial i.e., Jackson Financial and Alsea SAB go up and down completely randomly.

Pair Corralation between Jackson Financial and Alsea SAB

Assuming the 90 days trading horizon Jackson Financial is expected to under-perform the Alsea SAB. But the preferred stock apears to be less risky and, when comparing its historical volatility, Jackson Financial is 5.54 times less risky than Alsea SAB. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Alsea SAB de is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  218.00  in Alsea SAB de on December 27, 2024 and sell it today you would lose (6.00) from holding Alsea SAB de or give up 2.75% of portfolio value over 90 days.

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

Jackson Financial  vs.  Alsea SAB de

Jackson Financial

Risk-Adjusted Performance

Weak

Over the last 90 days Jackson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Alsea SAB de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alsea SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alsea SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jackson Financial and Alsea SAB

The main advantage of trading using opposite Jackson Financial and Alsea SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, Alsea SAB 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 Alsea SAB will offset losses from the drop in Alsea SAB's long position.

The idea behind Jackson Financial and Alsea SAB de 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.