Correlation Between Jacobs Solutions and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Sandstorm Gold 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 Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Jacobs Solutions and Sandstorm Gold 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 Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Sandstorm Gold.
Diversification Opportunities for Jacobs Solutions and Sandstorm Gold
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jacobs and Sandstorm is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Sandstorm Gold
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.6 times more return on investment than Sandstorm Gold. However, Jacobs Solutions is 1.68 times less risky than Sandstorm Gold. It trades about 0.08 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.03 per unit of risk. If you would invest 9,564 in Jacobs Solutions on September 2, 2024 and sell it today you would earn a total of 4,559 from holding Jacobs Solutions or generate 47.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| Jacobs Solutions |
| Sandstorm Gold |
Jacobs Solutions and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Sandstorm Gold
The main advantage of trading using opposite Jacobs Solutions and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Sandstorm Gold 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 Sandstorm Gold will offset losses from the drop in Sandstorm Gold's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| Sandstorm Gold vs. Fortitude Gold Corp | Sandstorm Gold vs. New Gold | Sandstorm Gold vs. Galiano Gold | Sandstorm Gold vs. GoldMining |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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