Correlation Between Jacobs Solutions and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and WW Grainger 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 WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and WW Grainger, you can compare the effects of market volatilities on Jacobs Solutions and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and WW Grainger.
Diversification Opportunities for Jacobs Solutions and WW Grainger
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jacobs and GWW is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and WW Grainger go up and down completely randomly.
Pair Corralation between Jacobs Solutions and WW Grainger
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 1.59 times less return on investment than WW Grainger. In addition to that, Jacobs Solutions is 1.07 times more volatile than WW Grainger. It trades about 0.15 of its total potential returns per unit of risk. WW Grainger is currently generating about 0.26 per unit of volatility. If you would invest 95,840 in WW Grainger on August 31, 2024 and sell it today you would earn a total of 24,747 from holding WW Grainger or generate 25.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. WW Grainger
Performance |
| Timeline |
| Jacobs Solutions |
| WW Grainger |
Jacobs Solutions and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and WW Grainger
The main advantage of trading using opposite Jacobs Solutions and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial Technologies |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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