Correlation Between Jackson Financial and Lincoln National

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

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

Diversification Opportunities for Jackson Financial and Lincoln National

0.89

Correlation Coefficient

Jackson Financial  Lincoln National

Very poor diversification

The 3 months correlation between Jackson and Lincoln is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Jackson Financial i.e., Jackson Financial and Lincoln National go up and down completely randomly.

Pair Corralation between Jackson Financial and Lincoln National

Considering the 90-day investment horizon Jackson Financial is expected to generate 1.07 times more return on investment than Lincoln National. However, Jackson Financial is 1.07 times more volatile than Lincoln National. It trades about 0.11 of its potential returns per unit of risk. Lincoln National is currently generating about 0.09 per unit of risk. If you would invest  8,496  in Jackson Financial on September 2, 2024 and sell it today you would earn a total of  1,523  from holding Jackson Financial or generate 17.93% return on investment over 90 days.

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

Jackson Financial  vs.  Lincoln National

Jackson Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Jackson Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Lincoln National

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln National are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lincoln National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jackson Financial and Lincoln National

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

The idea behind Jackson Financial and Lincoln National 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.