Correlation Between Jacobs Solutions and Aecom Technology
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and Aecom Technology 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 Aecom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Aecom Technology, you can compare the effects of market volatilities on Jacobs Solutions and Aecom Technology 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 Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Aecom Technology.
Diversification Opportunities for Jacobs Solutions and Aecom Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jacobs and Aecom is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology 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 Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Aecom Technology go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Aecom Technology
Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Aecom Technology. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 1.38 times less risky than Aecom Technology. The stock trades about -0.16 of its potential returns per unit of risk. The Aecom Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,159 in Aecom Technology on January 18, 2024 and sell it today you would earn a total of 94.00 from holding Aecom Technology or generate 1.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Jacobs Solutions vs. Aecom Technology
Performance |
Timeline |
Jacobs Solutions |
Aecom Technology |
Jacobs Solutions and Aecom Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jacobs Solutions and Aecom Technology
The main advantage of trading using opposite Jacobs Solutions and Aecom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Aecom Technology 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 Aecom Technology will offset losses from the drop in Aecom Technology's long position.Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Topbuild Corp | Jacobs Solutions vs. Comfort Systems USA |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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