Correlation Between Beauty Health and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Beauty Health and Jacobs Solutions 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 Beauty Health and Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beauty Health Co and Jacobs Solutions, you can compare the effects of market volatilities on Beauty Health and Jacobs Solutions 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 Beauty Health with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Health and Jacobs Solutions.
Diversification Opportunities for Beauty Health and Jacobs Solutions
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beauty and Jacobs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Beauty Health 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 Beauty Health Co are associated (or correlated) with Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Beauty Health i.e., Beauty Health and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Beauty Health and Jacobs Solutions
Given the investment horizon of 90 days Beauty Health Co is expected to under-perform the Jacobs Solutions. In addition to that, Beauty Health is 2.43 times more volatile than Jacobs Solutions. It trades about -0.19 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about -0.23 per unit of volatility. If you would invest 14,925 in Jacobs Solutions on September 14, 2024 and sell it today you would lose (1,323) from holding Jacobs Solutions or give up 8.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beauty Health Co vs. Jacobs Solutions
Performance |
| Timeline |
| Beauty Health |
| Jacobs Solutions |
Beauty Health and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beauty Health and Jacobs Solutions
The main advantage of trading using opposite Beauty Health and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beauty Health position performs unexpectedly, Jacobs Solutions 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 Jacobs Solutions will offset losses from the drop in Jacobs Solutions' long position.| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs Inc |
| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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