Correlation Between Air Lease and Jacobs Solutions

Can any of the company-specific risk be diversified away by investing in both Air Lease 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 Air Lease and Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and Jacobs Solutions, you can compare the effects of market volatilities on Air Lease 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 Air Lease with a short position of Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Jacobs Solutions.

Diversification Opportunities for Air Lease and Jacobs Solutions

0.05

Correlation Coefficient

Air Lease  Jacobs Solutions

Significant diversification

The 3 months correlation between Air and Jacobs is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Air Lease 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 Air Lease 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 Air Lease i.e., Air Lease and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Air Lease and Jacobs Solutions

Allowing for the 90-day total investment horizon Air Lease is expected to generate 3.52 times less return on investment than Jacobs Solutions. In addition to that, Air Lease is 1.47 times more volatile than Jacobs Solutions. It trades about 0.02 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about 0.08 per unit of volatility. If you would invest  11,811  in Jacobs Solutions on September 22, 2024 and sell it today you would earn a total of  1,764  from holding Jacobs Solutions or generate 14.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Air Lease  vs.  Jacobs Solutions

Air Lease

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Jacobs Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Air Lease and Jacobs Solutions

The main advantage of trading using opposite Air Lease and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease 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.

The idea behind Air Lease and Jacobs Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..