Correlation Between Jackson Financial and Jackpot Digital

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Can any of the company-specific risk be diversified away by investing in both Jackson Financial and Jackpot Digital 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 Jackpot Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and Jackpot Digital, you can compare the effects of market volatilities on Jackson Financial and Jackpot Digital 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 Jackpot Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and Jackpot Digital.

Diversification Opportunities for Jackson Financial and Jackpot Digital

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Jackson and Jackpot is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Jackpot Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackpot Digital 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 Jackpot Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackpot Digital has no effect on the direction of Jackson Financial i.e., Jackson Financial and Jackpot Digital go up and down completely randomly.

Pair Corralation between Jackson Financial and Jackpot Digital

Assuming the 90 days trading horizon Jackson Financial is expected to under-perform the Jackpot Digital. But the preferred stock apears to be less risky and, when comparing its historical volatility, Jackson Financial is 16.0 times less risky than Jackpot Digital. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Jackpot Digital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.70  in Jackpot Digital on September 6, 2024 and sell it today you would earn a total of  0.00  from holding Jackpot Digital or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Jackson Financial  vs.  Jackpot Digital

 Performance 
       Timeline  
Jackson Financial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jackson Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Jackpot Digital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jackpot Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Jackpot Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Jackson Financial and Jackpot Digital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jackson Financial and Jackpot Digital

The main advantage of trading using opposite Jackson Financial and Jackpot Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, Jackpot Digital 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 Jackpot Digital will offset losses from the drop in Jackpot Digital's long position.
The idea behind Jackson Financial and Jackpot Digital 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.
Check out your portfolio center.
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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