Correlation Between Jackson Financial and National Western

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

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

Diversification Opportunities for Jackson Financial and National Western

-0.26

Correlation Coefficient

Jackson Financial  National Western

Very good diversification

The 3 months correlation between Jackson and National is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and National Western Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Western Life 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 National Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Western Life has no effect on the direction of Jackson Financial i.e., Jackson Financial and National Western go up and down completely randomly.

Pair Corralation between Jackson Financial and National Western

Considering the 90-day investment horizon Jackson Financial is expected to generate 0.9 times more return on investment than National Western. However, Jackson Financial is 1.11 times less risky than National Western. It trades about 0.09 of its potential returns per unit of risk. National Western Life is currently generating about 0.07 per unit of risk. If you would invest  3,139  in Jackson Financial on September 20, 2024 and sell it today you would earn a total of  5,531  from holding Jackson Financial or generate 176.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.81%
Values	Daily Returns

Jackson Financial  vs.  National Western Life

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.

National Western Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Western Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, National Western is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Jackson Financial and National Western

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

The idea behind Jackson Financial and National Western Life 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.