Correlation Between Midwest Holding and Jackson Financial

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

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

Diversification Opportunities for Midwest Holding and Jackson Financial

0.42

Correlation Coefficient

Midwest Holding  Jackson Financial

Very weak diversification

The 3 months correlation between Midwest and Jackson is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Midwest Holding and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Midwest Holding 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 Midwest Holding are associated (or correlated) with Jackson Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Financial has no effect on the direction of Midwest Holding i.e., Midwest Holding and Jackson Financial go up and down completely randomly.

Pair Corralation between Midwest Holding and Jackson Financial

Given the investment horizon of 90 days Midwest Holding is expected to generate 2.92 times more return on investment than Jackson Financial. However, Midwest Holding is 2.92 times more volatile than Jackson Financial. It trades about 0.09 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.09 per unit of risk. If you would invest  1,300  in Midwest Holding on September 25, 2024 and sell it today you would earn a total of  1,351  from holding Midwest Holding or generate 103.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	28.02%
Values	Daily Returns

Midwest Holding  vs.  Jackson Financial

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Jackson Financial

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jackson Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Midwest Holding and Jackson Financial

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

The idea behind Midwest Holding and Jackson Financial 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.