Correlation Between Sanlam and Jackson Financial

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

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

Diversification Opportunities for Sanlam and Jackson Financial

-0.16

Correlation Coefficient

Sanlam  Jackson Financial

Good diversification

The 3 months correlation between Sanlam and Jackson is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam Ltd PK and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Sanlam 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 Sanlam Ltd PK 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 Sanlam i.e., Sanlam and Jackson Financial go up and down completely randomly.

Pair Corralation between Sanlam and Jackson Financial

Assuming the 90 days horizon Sanlam Ltd PK is expected to generate 2.64 times more return on investment than Jackson Financial. However, Sanlam is 2.64 times more volatile than Jackson Financial. It trades about 0.01 of its potential returns per unit of risk. Jackson Financial is currently generating about -0.01 per unit of risk. If you would invest  933.00  in Sanlam Ltd PK on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Sanlam Ltd PK or generate 0.11% return on investment over 90 days.

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

Sanlam Ltd PK  vs.  Jackson Financial

Sanlam Ltd PK

Risk-Adjusted Performance

Weak

Over the last 90 days Sanlam Ltd PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Sanlam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. Despite somewhat strong basic indicators, Jackson Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sanlam and Jackson Financial

The main advantage of trading using opposite Sanlam and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanlam 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 Sanlam Ltd PK 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.