Correlation Between Jackson Financial and Qantas Airways

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

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

Diversification Opportunities for Jackson Financial and Qantas Airways

0.1

Correlation Coefficient

Jackson Financial  Qantas Airways

Average diversification

The 3 months correlation between Jackson and Qantas is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Qantas Airways Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Jackson Financial i.e., Jackson Financial and Qantas Airways go up and down completely randomly.

Pair Corralation between Jackson Financial and Qantas Airways

Assuming the 90 days trading horizon Jackson Financial is expected to under-perform the Qantas Airways. But the preferred stock apears to be less risky and, when comparing its historical volatility, Jackson Financial is 3.29 times less risky than Qantas Airways. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Qantas Airways Ltd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,814  in Qantas Airways Ltd on December 30, 2024 and sell it today you would earn a total of  185.00  from holding Qantas Airways Ltd or generate 6.57% return on investment over 90 days.

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

Jackson Financial  vs.  Qantas Airways Ltd

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.

Qantas Airways

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Qantas Airways may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jackson Financial and Qantas Airways

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

The idea behind Jackson Financial and Qantas Airways Ltd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.