Correlation Between Jacobs Solutions and Steel Partners
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Steel Partners 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 Steel Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Steel Partners Holdings, you can compare the effects of market volatilities on Jacobs Solutions and Steel Partners 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 Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Steel Partners.
Diversification Opportunities for Jacobs Solutions and Steel Partners
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and Steel is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings 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 Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Steel Partners go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Steel Partners
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 4.18 times more return on investment than Steel Partners. However, Jacobs Solutions is 4.18 times more volatile than Steel Partners Holdings. It trades about 0.09 of its potential returns per unit of risk. Steel Partners Holdings is currently generating about 0.12 per unit of risk. If you would invest 11,157 in Jacobs Solutions on August 28, 2024 and sell it today you would earn a total of 2,773 from holding Jacobs Solutions or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Steel Partners Holdings
Performance |
| Timeline |
| Jacobs Solutions |
| Steel Partners Holdings |
Jacobs Solutions and Steel Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Steel Partners
The main advantage of trading using opposite Jacobs Solutions and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.| Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Api Group Corp | Jacobs Solutions vs. Topbuild Corp |
| Steel Partners vs. Compass Diversified | Steel Partners vs. Brookfield Business Partners | Steel Partners vs. Matthews International | Steel Partners vs. Tejon Ranch Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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