Correlation Between Jackson Financial and Midwest Holding

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

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

Diversification Opportunities for Jackson Financial and Midwest Holding

0.55

Correlation Coefficient

Jackson Financial  Midwest Holding

Very weak diversification

The 3 months correlation between Jackson and Midwest is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Midwest Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midwest Holding 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 Midwest Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midwest Holding has no effect on the direction of Jackson Financial i.e., Jackson Financial and Midwest Holding go up and down completely randomly.

Pair Corralation between Jackson Financial and Midwest Holding

Considering the 90-day investment horizon Jackson Financial is expected to generate 2.97 times less return on investment than Midwest Holding. But when comparing it to its historical volatility, Jackson Financial is 2.91 times less risky than Midwest Holding. It trades about 0.09 of its potential returns per unit of risk. Midwest Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,274  in Midwest Holding on September 20, 2024 and sell it today you would earn a total of  1,377  from holding Midwest Holding or generate 108.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	28.43%
Values	Daily Returns

Jackson Financial  vs.  Midwest Holding

Jackson Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jackson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jackson Financial is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Midwest Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midwest Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Midwest Holding is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Jackson Financial and Midwest Holding

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

The idea behind Jackson Financial and Midwest Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.