Correlation Between Jacobs Solutions and KBR
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and KBR 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 KBR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and KBR Inc, you can compare the effects of market volatilities on Jacobs Solutions and KBR 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 KBR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and KBR.
Diversification Opportunities for Jacobs Solutions and KBR
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and KBR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc 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 KBR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBR Inc has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and KBR go up and down completely randomly.
Pair Corralation between Jacobs Solutions and KBR
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.79 times more return on investment than KBR. However, Jacobs Solutions is 1.26 times less risky than KBR. It trades about -0.29 of its potential returns per unit of risk. KBR Inc is currently generating about -0.39 per unit of risk. If you would invest 13,926 in Jacobs Solutions on November 18, 2024 and sell it today you would lose (1,038) from holding Jacobs Solutions or give up 7.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. KBR Inc
Performance |
| Timeline |
| Jacobs Solutions |
| KBR Inc |
Jacobs Solutions and KBR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and KBR
The main advantage of trading using opposite Jacobs Solutions and KBR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, KBR 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 KBR will offset losses from the drop in KBR'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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |