Correlation Between HE Equipment and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Jacobs Solutions, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Jacobs Solutions.
Diversification Opportunities for HE Equipment and Jacobs Solutions
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEES and Jacobs is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Jacobs Solutions go up and down completely randomly.
Pair Corralation between HE Equipment and Jacobs Solutions
Given the investment horizon of 90 days HE Equipment Services is expected to generate 1.06 times more return on investment than Jacobs Solutions. However, HE Equipment is 1.06 times more volatile than Jacobs Solutions. It trades about -0.13 of its potential returns per unit of risk. Jacobs Solutions is currently generating about -0.18 per unit of risk. If you would invest 5,939 in HE Equipment Services on September 13, 2024 and sell it today you would lose (336.00) from holding HE Equipment Services or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Jacobs Solutions
Performance |
| Timeline |
| HE Equipment Services |
| Jacobs Solutions |
HE Equipment and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Jacobs Solutions
The main advantage of trading using opposite HE Equipment and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. McGrath RentCorp | HE Equipment vs. Custom Truck One | HE Equipment vs. Herc Holdings | HE Equipment vs. Alta Equipment Group |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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