Correlation Between Jackson Financial and NETGEAR

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

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

Diversification Opportunities for Jackson Financial and NETGEAR

-0.03

Correlation Coefficient

Jackson Financial  NETGEAR

Good diversification

The 3 months correlation between Jackson and NETGEAR is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Jackson Financial i.e., Jackson Financial and NETGEAR go up and down completely randomly.

Pair Corralation between Jackson Financial and NETGEAR

Assuming the 90 days trading horizon Jackson Financial is expected to generate 2.19 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Jackson Financial is 2.77 times less risky than NETGEAR. It trades about 0.05 of its potential returns per unit of risk. NETGEAR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,987  in NETGEAR on October 10, 2024 and sell it today you would earn a total of  746.00  from holding NETGEAR or generate 37.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.74%
Values	Daily Returns

Jackson Financial  vs.  NETGEAR

Jackson Financial

Risk-Adjusted Performance

0 of 100

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.

NETGEAR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jackson Financial and NETGEAR

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

The idea behind Jackson Financial and NETGEAR 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.