Correlation Between Jacobs Solutions and Wabash National
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Wabash National 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 Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Wabash National, you can compare the effects of market volatilities on Jacobs Solutions and Wabash National 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 Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Wabash National.
Diversification Opportunities for Jacobs Solutions and Wabash National
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jacobs and Wabash is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Wabash National go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Wabash National
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.63 times more return on investment than Wabash National. However, Jacobs Solutions is 1.58 times less risky than Wabash National. It trades about 0.1 of its potential returns per unit of risk. Wabash National is currently generating about -0.04 per unit of risk. If you would invest 11,431 in Jacobs Solutions on August 24, 2024 and sell it today you would earn a total of 2,112 from holding Jacobs Solutions or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Wabash National
Performance |
| Timeline |
| Jacobs Solutions |
| Wabash National |
Jacobs Solutions and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Wabash National
The main advantage of trading using opposite Jacobs Solutions and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
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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