Correlation Between Jacobs Solutions and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and NioCorp Developments 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 NioCorp Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and NioCorp Developments Ltd, you can compare the effects of market volatilities on Jacobs Solutions and NioCorp Developments 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 NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and NioCorp Developments.
Diversification Opportunities for Jacobs Solutions and NioCorp Developments
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jacobs and NioCorp is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments 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 NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and NioCorp Developments go up and down completely randomly.
Pair Corralation between Jacobs Solutions and NioCorp Developments
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 13.48 times less return on investment than NioCorp Developments. But when comparing it to its historical volatility, Jacobs Solutions is 22.92 times less risky than NioCorp Developments. It trades about 0.07 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 92.00 in NioCorp Developments Ltd on November 30, 2024 and sell it today you would earn a total of 102.00 from holding NioCorp Developments Ltd or generate 110.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. NioCorp Developments Ltd
Performance |
| Timeline |
| Jacobs Solutions |
| NioCorp Developments |
Jacobs Solutions and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and NioCorp Developments
The main advantage of trading using opposite Jacobs Solutions and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| Jacobs Solutions vs. Granite Construction Incorporated | Jacobs Solutions vs. Matrix Service Co | Jacobs Solutions vs. Construction Partners | Jacobs Solutions vs. MYR Group |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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