Correlation Between Jacobs Solutions and Acumen Pharmaceuticals

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

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

Diversification Opportunities for Jacobs Solutions and Acumen Pharmaceuticals

0.75

Correlation Coefficient

Jacobs Solutions  Acumen Pharmaceuticals

Poor diversification

The 3 months correlation between Jacobs and Acumen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals 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 Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Acumen Pharmaceuticals

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.17 times more return on investment than Acumen Pharmaceuticals. However, Jacobs Solutions is 5.77 times less risky than Acumen Pharmaceuticals. It trades about 0.26 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  13,600  in Jacobs Solutions on October 25, 2024 and sell it today you would earn a total of  564.00  from holding Jacobs Solutions or generate 4.15% 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.  Acumen Pharmaceuticals

Jacobs Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Acumen Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Jacobs Solutions and Acumen Pharmaceuticals

The main advantage of trading using opposite Jacobs Solutions and Acumen Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Acumen Pharmaceuticals 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 Acumen Pharmaceuticals will offset losses from the drop in Acumen Pharmaceuticals' long position.

The idea behind Jacobs Solutions and Acumen Pharmaceuticals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.