Correlation Between Jacobs Solutions and Zurn Elkay
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Zurn Elkay 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 Zurn Elkay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Zurn Elkay Water, you can compare the effects of market volatilities on Jacobs Solutions and Zurn Elkay 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 Zurn Elkay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Zurn Elkay.
Diversification Opportunities for Jacobs Solutions and Zurn Elkay
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jacobs and Zurn is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Zurn Elkay Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurn Elkay Water 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 Zurn Elkay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurn Elkay Water has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Zurn Elkay go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Zurn Elkay
Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Zurn Elkay. In addition to that, Jacobs Solutions is 1.48 times more volatile than Zurn Elkay Water. It trades about -0.01 of its total potential returns per unit of risk. Zurn Elkay Water is currently generating about 0.31 per unit of volatility. If you would invest 3,584 in Zurn Elkay Water on August 30, 2024 and sell it today you would earn a total of 384.00 from holding Zurn Elkay Water or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Jacobs Solutions vs. Zurn Elkay Water
Performance |
| Timeline |
| Jacobs Solutions |
| Zurn Elkay Water |
Jacobs Solutions and Zurn Elkay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Zurn Elkay
The main advantage of trading using opposite Jacobs Solutions and Zurn Elkay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Zurn Elkay 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 Zurn Elkay will offset losses from the drop in Zurn Elkay's long position.| Jacobs Solutions vs. Dycom Industries | Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Wang Lee Group, |
| Zurn Elkay vs. Energy Recovery | Zurn Elkay vs. CECO Environmental Corp | Zurn Elkay vs. 374Water Common Stock | Zurn Elkay vs. Federal Signal |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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