Correlation Between Jacobs Solutions and Joby Aviation

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Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Joby Aviation 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 Joby Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Joby Aviation, you can compare the effects of market volatilities on Jacobs Solutions and Joby Aviation 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 Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Joby Aviation.

Diversification Opportunities for Jacobs Solutions and Joby Aviation

JacobsJobyDiversified AwayJacobsJobyDiversified Away100%
0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Jacobs and Joby is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation 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 Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Joby Aviation go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Joby Aviation

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.44 times more return on investment than Joby Aviation. However, Jacobs Solutions is 2.27 times less risky than Joby Aviation. It trades about -0.32 of its potential returns per unit of risk. Joby Aviation is currently generating about -0.37 per unit of risk. If you would invest  14,067  in Jacobs Solutions on November 25, 2024 and sell it today you would lose (1,161) from holding Jacobs Solutions or give up 8.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jacobs Solutions  vs.  Joby Aviation

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0204060
JavaScript chart by amCharts 3.21.15J JOBY
       Timeline  
Jacobs Solutions 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Jacobs Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb130135140145
Joby Aviation 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb77.588.599.51010.5

Jacobs Solutions and Joby Aviation Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.05-1.56-1.07-0.58-0.09360.340.831.321.81 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15J JOBY
       Returns  

Pair Trading with Jacobs Solutions and Joby Aviation

The main advantage of trading using opposite Jacobs Solutions and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation's long position.
The idea behind Jacobs Solutions and Joby Aviation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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