Correlation Between Aflac Incorporated and Jackson Financial

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

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

Diversification Opportunities for Aflac Incorporated and Jackson Financial

0.81

Correlation Coefficient

Aflac Incorporated  Jackson Financial

Very poor diversification

The 3 months correlation between Aflac and Jackson is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aflac Incorporated and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and Aflac Incorporated 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 Aflac Incorporated 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 Aflac Incorporated i.e., Aflac Incorporated and Jackson Financial go up and down completely randomly.

Pair Corralation between Aflac Incorporated and Jackson Financial

Considering the 90-day investment horizon Aflac Incorporated is expected to under-perform the Jackson Financial. But the stock apears to be less risky and, when comparing its historical volatility, Aflac Incorporated is 1.22 times less risky than Jackson Financial. The stock trades about -0.04 of its potential returns per unit of risk. The Jackson Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  6,602  in Jackson Financial on February 4, 2024 and sell it today you would earn a total of  514.00  from holding Jackson Financial or generate 7.79% return on investment over 90 days.

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

Aflac Incorporated  vs.  Jackson Financial

Aflac Incorporated

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aflac Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Aflac Incorporated may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Jackson Financial

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Financial are ranked lower than 25 (%) 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.

Pair Trading with Aflac Incorporated and Jackson Financial

The main advantage of trading using opposite Aflac Incorporated and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aflac Incorporated 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 Aflac Incorporated 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.