Correlation Between Century Aluminum and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Century Aluminum 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 Century Aluminum and Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Jacobs Solutions, you can compare the effects of market volatilities on Century Aluminum 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 Century Aluminum with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Jacobs Solutions.
Diversification Opportunities for Century Aluminum and Jacobs Solutions
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Jacobs is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Century Aluminum 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 Century Aluminum 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 Century Aluminum i.e., Century Aluminum and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Century Aluminum and Jacobs Solutions
Given the investment horizon of 90 days Century Aluminum is expected to generate 2.4 times more return on investment than Jacobs Solutions. However, Century Aluminum is 2.4 times more volatile than Jacobs Solutions. It trades about 0.21 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.11 per unit of risk. If you would invest 1,623 in Century Aluminum on August 31, 2024 and sell it today you would earn a total of 681.00 from holding Century Aluminum or generate 41.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. Jacobs Solutions
Performance |
| Timeline |
| Century Aluminum |
| Jacobs Solutions |
Century Aluminum and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Jacobs Solutions
The main advantage of trading using opposite Century Aluminum and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum 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.| Century Aluminum vs. RLJ Lodging Trust | Century Aluminum vs. Aquagold International | Century Aluminum vs. Stepstone Group | Century Aluminum vs. Morningstar Unconstrained Allocation |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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