Correlation Between Jackson Financial and Dollarama

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

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

Diversification Opportunities for Jackson Financial and Dollarama

0.24

Correlation Coefficient

Jackson Financial  Dollarama

Modest diversification

The 3 months correlation between Jackson and Dollarama is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama 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 Dollarama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollarama has no effect on the direction of Jackson Financial i.e., Jackson Financial and Dollarama go up and down completely randomly.

Pair Corralation between Jackson Financial and Dollarama

Assuming the 90 days trading horizon Jackson Financial is expected to under-perform the Dollarama. But the preferred stock apears to be less risky and, when comparing its historical volatility, Jackson Financial is 1.92 times less risky than Dollarama. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Dollarama is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,455  in Dollarama on December 2, 2024 and sell it today you would lose (27.00) from holding Dollarama or give up 0.26% 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.  Dollarama

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Dollarama

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dollarama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dollarama 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 Dollarama

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

The idea behind Jackson Financial and Dollarama 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.