Correlation Between G III and Jacobs Solutions

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

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

Diversification Opportunities for G III and Jacobs Solutions

-0.36

Correlation Coefficient

G III  Jacobs Solutions

Very good diversification

The 3 months correlation between GIII and Jacobs is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and G III 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 G III Apparel Group 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 G III i.e., G III and Jacobs Solutions go up and down completely randomly.

Pair Corralation between G III and Jacobs Solutions

Given the investment horizon of 90 days G III Apparel Group is expected to generate 1.61 times more return on investment than Jacobs Solutions. However, G III is 1.61 times more volatile than Jacobs Solutions. It trades about 0.03 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.01 per unit of risk. If you would invest  3,069  in G III Apparel Group on October 24, 2024 and sell it today you would earn a total of  77.00  from holding G III Apparel Group or generate 2.51% return on investment over 90 days.

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

G III Apparel Group  vs.  Jacobs Solutions

G III Apparel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, G III is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Jacobs Solutions

Risk-Adjusted Performance

0 of 100

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 relatively steady forward-looking indicators, Jacobs Solutions is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with G III and Jacobs Solutions

The main advantage of trading using opposite G III and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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 G III Apparel Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.