Correlation Between Jacobs Solutions and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Alta Equipment 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 Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Alta Equipment Group, you can compare the effects of market volatilities on Jacobs Solutions and Alta Equipment 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 Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Alta Equipment.
Diversification Opportunities for Jacobs Solutions and Alta Equipment
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jacobs and Alta is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group 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 Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Alta Equipment go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Alta Equipment
Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Alta Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 1.87 times less risky than Alta Equipment. The stock trades about -0.18 of its potential returns per unit of risk. The Alta Equipment Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 793.00 in Alta Equipment Group on September 13, 2024 and sell it today you would lose (46.00) from holding Alta Equipment Group or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Alta Equipment Group
Performance |
| Timeline |
| Jacobs Solutions |
| Alta Equipment Group |
Jacobs Solutions and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Alta Equipment
The main advantage of trading using opposite Jacobs Solutions and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Alta Equipment 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 Alta Equipment will offset losses from the drop in Alta Equipment's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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