Correlation Between International Media and Jacobs Solutions

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

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

Diversification Opportunities for International Media and Jacobs Solutions

-0.48

Correlation Coefficient

International Media  Jacobs Solutions

Very good diversification

The 3 months correlation between International and Jacobs is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Media Acquisitio and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and International Media 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 International Media Acquisition 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 International Media i.e., International Media and Jacobs Solutions go up and down completely randomly.

Pair Corralation between International Media and Jacobs Solutions

If you would invest  11,995  in Jacobs Solutions on September 13, 2024 and sell it today you would earn a total of  1,613  from holding Jacobs Solutions or generate 13.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

International Media Acquisitio  vs.  Jacobs Solutions

International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Media Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, International Media 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Media and Jacobs Solutions

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