Correlation Between Jacobs Solutions and American Airlines
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and American Airlines 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 Jacobs Solutions and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and American Airlines Group, you can compare the effects of market volatilities on Jacobs Solutions and American Airlines 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 Jacobs Solutions with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and American Airlines.
Diversification Opportunities for Jacobs Solutions and American Airlines
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jacobs and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Jacobs Solutions 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 Jacobs Solutions are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and American Airlines go up and down completely randomly.
Pair Corralation between Jacobs Solutions and American Airlines
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.69 times more return on investment than American Airlines. However, Jacobs Solutions is 1.44 times less risky than American Airlines. It trades about 0.05 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.0 per unit of risk. If you would invest 10,206 in Jacobs Solutions on December 5, 2024 and sell it today you would earn a total of 2,310 from holding Jacobs Solutions or generate 22.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. American Airlines Group
Performance |
| Timeline |
| Jacobs Solutions |
| American Airlines |
Jacobs Solutions and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and American Airlines
The main advantage of trading using opposite Jacobs Solutions and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Jacobs Solutions vs. KBR Inc | ||
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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