Correlation Between Barnes and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Barnes and Jacobs Solutions 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 Barnes and Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Jacobs Solutions, you can compare the effects of market volatilities on Barnes and Jacobs Solutions 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 Barnes with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Jacobs Solutions.
Diversification Opportunities for Barnes and Jacobs Solutions
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Barnes and Jacobs is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Barnes 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 Barnes Group are associated (or correlated) with Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Barnes i.e., Barnes and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Barnes and Jacobs Solutions
Taking into account the 90-day investment horizon Barnes is expected to generate 2.04 times less return on investment than Jacobs Solutions. But when comparing it to its historical volatility, Barnes Group is 21.07 times less risky than Jacobs Solutions. It trades about 0.08 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 14,140 in Jacobs Solutions on August 31, 2024 and sell it today you would lose (19.00) from holding Jacobs Solutions or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Jacobs Solutions
Performance |
| Timeline |
| Barnes Group |
| Jacobs Solutions |
Barnes and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Jacobs Solutions
The main advantage of trading using opposite Barnes and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Jacobs Solutions 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 Jacobs Solutions will offset losses from the drop in Jacobs Solutions' long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
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.
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