Correlation Between Jacobs Solutions and United Parcel
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and United Parcel Service, you can compare the effects of market volatilities on Jacobs Solutions and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and United Parcel.
Diversification Opportunities for Jacobs Solutions and United Parcel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and United is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and United Parcel go up and down completely randomly.
Pair Corralation between Jacobs Solutions and United Parcel
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.78 times more return on investment than United Parcel. However, Jacobs Solutions is 1.28 times less risky than United Parcel. It trades about 0.08 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.01 per unit of risk. If you would invest 10,726 in Jacobs Solutions on August 27, 2024 and sell it today you would earn a total of 3,010 from holding Jacobs Solutions or generate 28.06% 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. United Parcel Service
Performance |
| Timeline |
| Jacobs Solutions |
| United Parcel Service |
Jacobs Solutions and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and United Parcel
The main advantage of trading using opposite Jacobs Solutions and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Api Group Corp | Jacobs Solutions vs. Topbuild Corp |
| United Parcel vs. Expeditors International of | United Parcel vs. Aquagold International | United Parcel vs. Morningstar Unconstrained Allocation | United Parcel vs. Thrivent High Yield |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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