Correlation Between Jackson Financial and WH Group

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

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

Diversification Opportunities for Jackson Financial and WH Group

0.82

Correlation Coefficient

Jackson Financial  WH Group

Very poor diversification

The 3 months correlation between Jackson and WHGRF is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Jackson Financial i.e., Jackson Financial and WH Group go up and down completely randomly.

Pair Corralation between Jackson Financial and WH Group

Assuming the 90 days trading horizon Jackson Financial is expected to generate 4.04 times less return on investment than WH Group. But when comparing it to its historical volatility, Jackson Financial is 2.34 times less risky than WH Group. It trades about 0.12 of its potential returns per unit of risk. WH Group Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  68.00  in WH Group Limited on September 7, 2024 and sell it today you would earn a total of  11.00  from holding WH Group Limited or generate 16.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Jackson Financial  vs.  WH Group Limited

Jackson Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 9 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

WH Group Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, WH Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jackson Financial and WH Group

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

The idea behind Jackson Financial and WH Group Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.