Correlation Between Corporacion America and Jacobs Solutions

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

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

Diversification Opportunities for Corporacion America and Jacobs Solutions

0.69

Correlation Coefficient

Corporacion America  Jacobs Solutions

Poor diversification

The 3 months correlation between Corporacion and Jacobs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Corporacion America 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 Corporacion America Airports 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 Corporacion America i.e., Corporacion America and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Corporacion America and Jacobs Solutions

Given the investment horizon of 90 days Corporacion America Airports is expected to generate 2.19 times more return on investment than Jacobs Solutions. However, Corporacion America is 2.19 times more volatile than Jacobs Solutions. It trades about 0.01 of its potential returns per unit of risk. Jacobs Solutions is currently generating about -0.1 per unit of risk. If you would invest  1,878  in Corporacion America Airports on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Corporacion America Airports or generate 0.16% return on investment over 90 days.

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

Corporacion America Airports  vs.  Jacobs Solutions

Corporacion America

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Jacobs Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jacobs Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Corporacion America and Jacobs Solutions

The main advantage of trading using opposite Corporacion America and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporacion America 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 Corporacion America Airports 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.