Correlation Between Jackson Financial and Givaudan
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and Givaudan 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 Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and Givaudan SA, you can compare the effects of market volatilities on Jackson Financial and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and Givaudan.
Diversification Opportunities for Jackson Financial and Givaudan
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jackson and Givaudan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Jackson Financial i.e., Jackson Financial and Givaudan go up and down completely randomly.
Pair Corralation between Jackson Financial and Givaudan
Assuming the 90 days trading horizon Jackson Financial is expected to generate 2.39 times less return on investment than Givaudan. But when comparing it to its historical volatility, Jackson Financial is 2.84 times less risky than Givaudan. It trades about 0.05 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 318,200 in Givaudan SA on September 5, 2024 and sell it today you would earn a total of 114,468 from holding Givaudan SA or generate 35.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 85.07% |
Values | Daily Returns |
Jackson Financial vs. Givaudan SA
Performance |
Timeline |
Jackson Financial |
Givaudan SA |
Jackson Financial and Givaudan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jackson Financial and Givaudan
The main advantage of trading using opposite Jackson Financial and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.Jackson Financial vs. NRG Energy | Jackson Financial vs. United Utilities Group | Jackson Financial vs. Aris Water Solutions | Jackson Financial vs. Western Midstream Partners |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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