Correlation Between Jackson Financial and CAPITAL

Can any of the company-specific risk be diversified away by investing in both Jackson Financial and 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 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 CAPITAL ONE FINL, you can compare the effects of market volatilities on Jackson Financial and 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 CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and CAPITAL.

Diversification Opportunities for Jackson Financial and CAPITAL

-0.27

Correlation Coefficient

Jackson Financial  CAPITAL

Very good diversification

The 3 months correlation between Jackson and CAPITAL is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and CAPITAL ONE FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAPITAL ONE FINL 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 CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAPITAL ONE FINL has no effect on the direction of Jackson Financial i.e., Jackson Financial and CAPITAL go up and down completely randomly.

Pair Corralation between Jackson Financial and CAPITAL

Assuming the 90 days trading horizon Jackson Financial is expected to generate 3.47 times more return on investment than CAPITAL. However, Jackson Financial is 3.47 times more volatile than CAPITAL ONE FINL. It trades about 0.1 of its potential returns per unit of risk. CAPITAL ONE FINL is currently generating about -0.11 per unit of risk. If you would invest  2,603  in Jackson Financial on September 12, 2024 and sell it today you would earn a total of  82.00  from holding Jackson Financial or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Jackson Financial  vs.  CAPITAL ONE FINL

Jackson Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jackson Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CAPITAL ONE FINL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAPITAL ONE FINL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAPITAL 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 CAPITAL

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

The idea behind Jackson Financial and CAPITAL ONE FINL 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.