Correlation Between Jacobs Solutions and Simpson Manufacturing
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Simpson Manufacturing 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 Simpson Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Simpson Manufacturing, you can compare the effects of market volatilities on Jacobs Solutions and Simpson Manufacturing 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 Simpson Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Simpson Manufacturing.
Diversification Opportunities for Jacobs Solutions and Simpson Manufacturing
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jacobs and Simpson is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Simpson Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simpson Manufacturing 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 Simpson Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simpson Manufacturing has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Simpson Manufacturing go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Simpson Manufacturing
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 5.45 times less return on investment than Simpson Manufacturing. In addition to that, Jacobs Solutions is 1.02 times more volatile than Simpson Manufacturing. It trades about 0.02 of its total potential returns per unit of risk. Simpson Manufacturing is currently generating about 0.11 per unit of volatility. If you would invest 17,979 in Simpson Manufacturing on September 1, 2024 and sell it today you would earn a total of 861.00 from holding Simpson Manufacturing or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Simpson Manufacturing
Performance |
| Timeline |
| Jacobs Solutions |
| Simpson Manufacturing |
Jacobs Solutions and Simpson Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Simpson Manufacturing
The main advantage of trading using opposite Jacobs Solutions and Simpson Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Simpson Manufacturing 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 Simpson Manufacturing will offset losses from the drop in Simpson Manufacturing's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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