Correlation Between Jackson Financial and Sanlam

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

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

Diversification Opportunities for Jackson Financial and Sanlam

-0.16

Correlation Coefficient

Jackson Financial  Sanlam

Good diversification

The 3 months correlation between Jackson and Sanlam is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Sanlam Ltd PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Ltd PK 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 Sanlam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Ltd PK has no effect on the direction of Jackson Financial i.e., Jackson Financial and Sanlam go up and down completely randomly.

Pair Corralation between Jackson Financial and Sanlam

Assuming the 90 days trading horizon Jackson Financial is expected to under-perform the Sanlam. But the preferred stock apears to be less risky and, when comparing its historical volatility, Jackson Financial is 2.64 times less risky than Sanlam. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Sanlam Ltd PK is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  933.00  in Sanlam Ltd PK on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Sanlam Ltd PK or generate 0.11% return on investment over 90 days.

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

Jackson Financial  vs.  Sanlam Ltd PK

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.

Sanlam Ltd PK

Risk-Adjusted Performance

Weak

Over the last 90 days Sanlam Ltd PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Sanlam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jackson Financial and Sanlam

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

The idea behind Jackson Financial and Sanlam Ltd PK 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.