Correlation Between Jacobs Solutions and Western Sierra
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Western Sierra 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 Western Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Western Sierra Mining, you can compare the effects of market volatilities on Jacobs Solutions and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Western Sierra.
Diversification Opportunities for Jacobs Solutions and Western Sierra
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Jacobs and Western is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Western Sierra go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Western Sierra
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 199.81 times less return on investment than Western Sierra. But when comparing it to its historical volatility, Jacobs Solutions is 98.95 times less risky than Western Sierra. It trades about 0.07 of its potential returns per unit of risk. Western Sierra Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.88 in Western Sierra Mining on September 3, 2024 and sell it today you would lose (0.20) from holding Western Sierra Mining or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Jacobs Solutions vs. Western Sierra Mining
Performance |
| Timeline |
| Jacobs Solutions |
| Western Sierra Mining |
Jacobs Solutions and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Western Sierra
The main advantage of trading using opposite Jacobs Solutions and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Galexxy Holdings | Western Sierra vs. Indoor Harvest Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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