Correlation Between Jacobs Solutions and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and BBB Foods, you can compare the effects of market volatilities on Jacobs Solutions and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and BBB Foods.
Diversification Opportunities for Jacobs Solutions and BBB Foods
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and BBB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and BBB Foods go up and down completely randomly.
Pair Corralation between Jacobs Solutions and BBB Foods
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 2.52 times less return on investment than BBB Foods. But when comparing it to its historical volatility, Jacobs Solutions is 2.33 times less risky than BBB Foods. It trades about 0.08 of its potential returns per unit of risk. BBB Foods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,750 in BBB Foods on August 31, 2024 and sell it today you would earn a total of 1,072 from holding BBB Foods or generate 61.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 54.81% |
| Values | Daily Returns |
Jacobs Solutions vs. BBB Foods
Performance |
| Timeline |
| Jacobs Solutions |
| BBB Foods |
Jacobs Solutions and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and BBB Foods
The main advantage of trading using opposite Jacobs Solutions and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| BBB Foods vs. Citizens Bancorp Investment | BBB Foods vs. Stepstone Group | BBB Foods vs. Independence Realty Trust | BBB Foods vs. Western Sierra Mining |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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