Correlation Between Jackson Financial and Torrent Capital

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

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

Diversification Opportunities for Jackson Financial and Torrent Capital

0.56

Correlation Coefficient

Jackson Financial  Torrent Capital

Very weak diversification

The 3 months correlation between Jackson and Torrent is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Torrent Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torrent Capital 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 Torrent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torrent Capital has no effect on the direction of Jackson Financial i.e., Jackson Financial and Torrent Capital go up and down completely randomly.

Pair Corralation between Jackson Financial and Torrent Capital

Assuming the 90 days trading horizon Jackson Financial is expected to generate 0.51 times more return on investment than Torrent Capital. However, Jackson Financial is 1.96 times less risky than Torrent Capital. It trades about -0.01 of its potential returns per unit of risk. Torrent Capital is currently generating about -0.02 per unit of risk. If you would invest  2,626  in Jackson Financial on December 30, 2024 and sell it today you would lose (14.00) from holding Jackson Financial or give up 0.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Jackson Financial  vs.  Torrent Capital

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.

Torrent Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Torrent Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Torrent Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jackson Financial and Torrent Capital

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

The idea behind Jackson Financial and Torrent Capital 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.