Correlation Between Jacobs Solutions and Fluor
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Fluor 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 Fluor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Fluor, you can compare the effects of market volatilities on Jacobs Solutions and Fluor 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 Fluor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Fluor.
Diversification Opportunities for Jacobs Solutions and Fluor
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and Fluor is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor 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 Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Fluor go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Fluor
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 1.58 times less return on investment than Fluor. But when comparing it to its historical volatility, Jacobs Solutions is 1.75 times less risky than Fluor. It trades about 0.08 of its potential returns per unit of risk. Fluor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,900 in Fluor on August 27, 2024 and sell it today you would earn a total of 1,679 from holding Fluor or generate 43.05% 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. Fluor
Performance |
| Timeline |
| Jacobs Solutions |
| Fluor |
Jacobs Solutions and Fluor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Fluor
The main advantage of trading using opposite Jacobs Solutions and Fluor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Fluor 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 Fluor will offset losses from the drop in Fluor's long position.| Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Api Group Corp | 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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