Correlation Between Jackson Financial and Sanlam

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

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

Diversification Opportunities for Jackson Financial and Sanlam

0.42

Correlation Coefficient

Jackson Financial  Sanlam

Very weak diversification

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

Pair Corralation between Jackson Financial and Sanlam

Assuming the 90 days trading horizon Jackson Financial is expected to generate 1.55 times less return on investment than Sanlam. But when comparing it to its historical volatility, Jackson Financial is 2.66 times less risky than Sanlam. It trades about 0.1 of its potential returns per unit of risk. Sanlam Ltd PK is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  990.00  in Sanlam Ltd PK on September 12, 2024 and sell it today you would earn a total of  44.00  from holding Sanlam Ltd PK or generate 4.44% return on investment over 90 days.

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

Jackson Financial  vs.  Sanlam Ltd PK

Jackson Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 7 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Sanlam Ltd PK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Ltd PK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Jackson Financial and Sanlam

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

The idea behind Jackson Financial and Sanlam Ltd PK 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.