Correlation Between Jacobs Solutions and EMCOR
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and EMCOR 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 EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and EMCOR Group, you can compare the effects of market volatilities on Jacobs Solutions and EMCOR 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 EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and EMCOR.
Diversification Opportunities for Jacobs Solutions and EMCOR
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jacobs and EMCOR is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and EMCOR go up and down completely randomly.
Pair Corralation between Jacobs Solutions and EMCOR
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 1.62 times less return on investment than EMCOR. But when comparing it to its historical volatility, Jacobs Solutions is 3.73 times less risky than EMCOR. It trades about 0.02 of its potential returns per unit of risk. EMCOR Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 47,562 in EMCOR Group on November 9, 2024 and sell it today you would lose (845.00) from holding EMCOR Group or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Jacobs Solutions vs. EMCOR Group
Performance |
| Timeline |
| Jacobs Solutions |
| EMCOR Group |
Jacobs Solutions and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and EMCOR
The main advantage of trading using opposite Jacobs Solutions and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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