Correlation Between Jackson Financial and Manulife Financial

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

Diversification Opportunities for Jackson Financial and Manulife Financial

0.12

Correlation Coefficient

Jackson Financial  Manulife Financial

Average diversification

The 3 months correlation between Jackson and Manulife is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp 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 Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of Jackson Financial i.e., Jackson Financial and Manulife Financial go up and down completely randomly.

Pair Corralation between Jackson Financial and Manulife Financial

Considering the 90-day investment horizon Jackson Financial is expected to generate 1.33 times less return on investment than Manulife Financial. In addition to that, Jackson Financial is 1.39 times more volatile than Manulife Financial Corp. It trades about 0.01 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.02 per unit of volatility. If you would invest  3,031  in Manulife Financial Corp on December 29, 2024 and sell it today you would earn a total of  45.00  from holding Manulife Financial Corp or generate 1.48% return on investment over 90 days.

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

Jackson Financial  vs.  Manulife Financial Corp

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. 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.

Manulife Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Manulife Financial is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Jackson Financial and Manulife Financial

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

The idea behind Jackson Financial and Manulife Financial Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.