Correlation Between Jackson Financial and ONCOR

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

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

Diversification Opportunities for Jackson Financial and ONCOR

0.1

Correlation Coefficient

Jackson Financial  ONCOR

Average diversification

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

Pair Corralation between Jackson Financial and ONCOR

Assuming the 90 days trading horizon Jackson Financial is expected to generate 1.14 times more return on investment than ONCOR. However, Jackson Financial is 1.14 times more volatile than ONCOR ELEC DELIVERY. It trades about -0.03 of its potential returns per unit of risk. ONCOR ELEC DELIVERY is currently generating about -0.14 per unit of risk. If you would invest  2,680  in Jackson Financial on December 2, 2024 and sell it today you would lose (43.00) from holding Jackson Financial or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	52.46%
Values	Daily Returns

Jackson Financial  vs.  ONCOR ELEC DELIVERY

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 latest stock price disturbance, may contribute to short-term losses for the investors.

ONCOR ELEC DELIVERY

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Jackson Financial and ONCOR ELEC DELIVERY 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..