Correlation Between Coty and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Coty 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 Coty and Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and Jacobs Solutions, you can compare the effects of market volatilities on Coty 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 Coty with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Jacobs Solutions.
Diversification Opportunities for Coty and Jacobs Solutions
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coty and Jacobs is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Coty 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 Coty Inc 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 Coty i.e., Coty and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Coty and Jacobs Solutions
Given the investment horizon of 90 days Coty Inc is expected to under-perform the Jacobs Solutions. In addition to that, Coty is 1.52 times more volatile than Jacobs Solutions. It trades about -0.1 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about 0.09 per unit of volatility. If you would invest 10,745 in Jacobs Solutions on August 25, 2024 and sell it today you would earn a total of 2,991 from holding Jacobs Solutions or generate 27.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coty Inc vs. Jacobs Solutions
Performance |
| Timeline |
| Coty Inc |
| Jacobs Solutions |
Coty and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and Jacobs Solutions
The main advantage of trading using opposite Coty and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty 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.The idea behind Coty Inc and Jacobs Solutions 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.| Jacobs Solutions vs. Dycom Industries | Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Wang Lee Group, |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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