Correlation Between Jacobs Solutions and AMREP

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

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

Diversification Opportunities for Jacobs Solutions and AMREP

0.89

Correlation Coefficient

Jacobs Solutions  AMREP

Very poor diversification

The 3 months correlation between Jacobs and AMREP is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and AMREP go up and down completely randomly.

Pair Corralation between Jacobs Solutions and AMREP

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.34 times more return on investment than AMREP. However, Jacobs Solutions is 2.93 times less risky than AMREP. It trades about -0.11 of its potential returns per unit of risk. AMREP is currently generating about -0.19 per unit of risk. If you would invest  13,474  in Jacobs Solutions on December 27, 2024 and sell it today you would lose (1,077) from holding Jacobs Solutions or give up 7.99% of portfolio value over 90 days.

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

Jacobs Solutions  vs.  AMREP

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 weak 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.

AMREP

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMREP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Jacobs Solutions and AMREP

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

The idea behind Jacobs Solutions and AMREP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.