Correlation Between Jacobs Solutions and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Allegheny Technologies 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 Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Jacobs Solutions and Allegheny Technologies 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 Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Allegheny Technologies.
Diversification Opportunities for Jacobs Solutions and Allegheny Technologies
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jacobs and Allegheny is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies 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 Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Allegheny Technologies
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.68 times more return on investment than Allegheny Technologies. However, Jacobs Solutions is 1.47 times less risky than Allegheny Technologies. It trades about 0.11 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.06 per unit of risk. If you would invest 12,883 in Jacobs Solutions on August 27, 2024 and sell it today you would earn a total of 1,047 from holding Jacobs Solutions or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Jacobs Solutions |
| Allegheny Technologies |
Jacobs Solutions and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Allegheny Technologies
The main advantage of trading using opposite Jacobs Solutions and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Api Group Corp | Jacobs Solutions vs. Topbuild Corp |
| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. Haynes International | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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