Correlation Between Kansas City and Jackson Financial

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

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

Diversification Opportunities for Kansas City and Jackson Financial

0.07

Correlation Coefficient

Kansas City  Jackson Financial

Significant diversification

The 3 months correlation between Kansas and Jackson is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kansas City Life and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Kansas City 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 Kansas City Life 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 Kansas City i.e., Kansas City and Jackson Financial go up and down completely randomly.

Pair Corralation between Kansas City and Jackson Financial

If you would invest  7,433  in Jackson Financial on September 30, 2024 and sell it today you would earn a total of  1,369  from holding Jackson Financial or generate 18.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Kansas City Life  vs.  Jackson Financial

Kansas City Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kansas City Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Kansas City is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Jackson Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jackson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Kansas City and Jackson Financial

The main advantage of trading using opposite Kansas City and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kansas City 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 Kansas City Life 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.

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.