Correlation Between Jacobs Solutions and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Olympic Steel 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 Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Olympic Steel, you can compare the effects of market volatilities on Jacobs Solutions and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Olympic Steel.
Diversification Opportunities for Jacobs Solutions and Olympic Steel
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Jacobs and Olympic is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Olympic Steel go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Olympic Steel
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.51 times more return on investment than Olympic Steel. However, Jacobs Solutions is 1.96 times less risky than Olympic Steel. It trades about 0.06 of its potential returns per unit of risk. Olympic Steel is currently generating about 0.03 per unit of risk. If you would invest 10,065 in Jacobs Solutions on August 28, 2024 and sell it today you would earn a total of 4,004 from holding Jacobs Solutions or generate 39.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Olympic Steel
Performance |
| Timeline |
| Jacobs Solutions |
| Olympic Steel |
Jacobs Solutions and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Olympic Steel
The main advantage of trading using opposite Jacobs Solutions and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Topbuild 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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