Correlation Between Jackson Financial and CNO Financial

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

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

Diversification Opportunities for Jackson Financial and CNO Financial

0.77

Correlation Coefficient

Jackson Financial  CNO Financial

Poor diversification

The 3 months correlation between Jackson and CNO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and CNO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNO Financial Group 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 CNO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNO Financial Group has no effect on the direction of Jackson Financial i.e., Jackson Financial and CNO Financial go up and down completely randomly.

Pair Corralation between Jackson Financial and CNO Financial

Considering the 90-day investment horizon Jackson Financial is expected to generate 1.34 times more return on investment than CNO Financial. However, Jackson Financial is 1.34 times more volatile than CNO Financial Group. It trades about 0.11 of its potential returns per unit of risk. CNO Financial Group is currently generating about 0.13 per unit of risk. If you would invest  8,496  in Jackson Financial on August 31, 2024 and sell it today you would earn a total of  1,517  from holding Jackson Financial or generate 17.86% return on investment over 90 days.

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

Jackson Financial  vs.  CNO Financial Group

Jackson Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Jackson Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

CNO Financial Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNO Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CNO Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jackson Financial and CNO Financial

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

The idea behind Jackson Financial and CNO Financial Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.