Correlation Between Jacobs Solutions and ChampionX
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and ChampionX 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 ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and ChampionX, you can compare the effects of market volatilities on Jacobs Solutions and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and ChampionX.
Diversification Opportunities for Jacobs Solutions and ChampionX
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and ChampionX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and ChampionX go up and down completely randomly.
Pair Corralation between Jacobs Solutions and ChampionX
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.46 times more return on investment than ChampionX. However, Jacobs Solutions is 2.18 times less risky than ChampionX. It trades about 0.04 of its potential returns per unit of risk. ChampionX is currently generating about 0.01 per unit of risk. If you would invest 13,736 in Jacobs Solutions on October 23, 2024 and sell it today you would earn a total of 190.00 from holding Jacobs Solutions or generate 1.38% 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. ChampionX
Performance |
| Timeline |
| Jacobs Solutions |
| ChampionX |
Jacobs Solutions and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and ChampionX
The main advantage of trading using opposite Jacobs Solutions and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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