Correlation Between Jackson Financial and Alliance Resource

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

By analyzing existing cross correlation between Jackson Financial and Alliance Resource Partners, you can compare the effects of market volatilities on Jackson Financial and Alliance Resource 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 Alliance Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and Alliance Resource.

Diversification Opportunities for Jackson Financial and Alliance Resource

0.47

Correlation Coefficient

Jackson Financial  Alliance Resource

Very weak diversification

The 3 months correlation between Jackson and Alliance is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Alliance Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Resource 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 Alliance Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Resource has no effect on the direction of Jackson Financial i.e., Jackson Financial and Alliance Resource go up and down completely randomly.

Pair Corralation between Jackson Financial and Alliance Resource

Assuming the 90 days trading horizon Jackson Financial is expected to under-perform the Alliance Resource. But the preferred stock apears to be less risky and, when comparing its historical volatility, Jackson Financial is 2.71 times less risky than Alliance Resource. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Alliance Resource Partners is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,524  in Alliance Resource Partners on December 30, 2024 and sell it today you would earn a total of  142.00  from holding Alliance Resource Partners or generate 5.63% return on investment over 90 days.

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

Jackson Financial  vs.  Alliance Resource Partners

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. Despite somewhat strong basic indicators, Jackson Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Alliance Resource

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Resource Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Alliance Resource may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jackson Financial and Alliance Resource

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

The idea behind Jackson Financial and Alliance Resource Partners 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.