Correlation Between Jacobs Solutions and AMREP
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and AMREP 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 AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and AMREP, you can compare the effects of market volatilities on Jacobs Solutions and AMREP 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 AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and AMREP.
Diversification Opportunities for Jacobs Solutions and AMREP
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and AMREP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and AMREP go up and down completely randomly.
Pair Corralation between Jacobs Solutions and AMREP
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 12.26 times less return on investment than AMREP. But when comparing it to its historical volatility, Jacobs Solutions is 2.2 times less risky than AMREP. It trades about 0.03 of its potential returns per unit of risk. AMREP is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,078 in AMREP on September 3, 2024 and sell it today you would earn a total of 526.00 from holding AMREP or generate 17.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. AMREP
Performance |
| Timeline |
| Jacobs Solutions |
| AMREP |
Jacobs Solutions and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and AMREP
The main advantage of trading using opposite Jacobs Solutions and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| AMREP vs. Landsea Homes Corp | AMREP vs. Forestar Group | AMREP vs. Five Point Holdings | AMREP vs. American Realty Investors |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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