Correlation Between Western Acquisition and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Western Acquisition 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 Western Acquisition and Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and Jacobs Solutions, you can compare the effects of market volatilities on Western Acquisition 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 Western Acquisition with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Jacobs Solutions.
Diversification Opportunities for Western Acquisition and Jacobs Solutions
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Jacobs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Western Acquisition and Jacobs Solutions
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the Jacobs Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Western Acquisition Ventures is 1.06 times less risky than Jacobs Solutions. The stock trades about -0.18 of its potential returns per unit of risk. The Jacobs Solutions is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 14,120 in Jacobs Solutions on August 29, 2024 and sell it today you would lose (51.00) from holding Jacobs Solutions or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Jacobs Solutions
Performance |
| Timeline |
| Western Acquisition |
| Jacobs Solutions |
Western Acquisition and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Jacobs Solutions
The main advantage of trading using opposite Western Acquisition and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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.| Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International | Western Acquisition vs. Barloworld Ltd ADR |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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