Correlation Between Jacobs Solutions and Trinity Industries
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Trinity Industries 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 Trinity Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Trinity Industries, you can compare the effects of market volatilities on Jacobs Solutions and Trinity Industries 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 Trinity Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Trinity Industries.
Diversification Opportunities for Jacobs Solutions and Trinity Industries
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and Trinity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries 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 Trinity Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Industries has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Trinity Industries go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Trinity Industries
Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Trinity Industries. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 1.29 times less risky than Trinity Industries. The stock trades about -0.01 of its potential returns per unit of risk. The Trinity Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,564 in Trinity Industries on August 30, 2024 and sell it today you would earn a total of 181.00 from holding Trinity Industries or generate 5.08% 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. Trinity Industries
Performance |
| Timeline |
| Jacobs Solutions |
| Trinity Industries |
Jacobs Solutions and Trinity Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Trinity Industries
The main advantage of trading using opposite Jacobs Solutions and Trinity Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Trinity Industries 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 Trinity Industries will offset losses from the drop in Trinity Industries' long position.| Jacobs Solutions vs. Dycom Industries | Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Wang Lee Group, |
| Trinity Industries vs. LB Foster | Trinity Industries vs. Freightcar America | Trinity Industries vs. Westinghouse Air Brake | Trinity Industries vs. Norfolk Southern |
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 Stocks Directory module to find actively traded stocks across global markets.
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