Correlation Between Jacobs Solutions and A2Z Smart

Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions and A2Z Smart 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 A2Z Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jacobs Solutions and A2Z Smart Technologies, you can compare the effects of market volatilities on Jacobs Solutions and A2Z Smart 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 A2Z Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and A2Z Smart.

Diversification Opportunities for Jacobs Solutions and A2Z Smart

0.39

Correlation Coefficient

Jacobs Solutions  A2Z Smart

Weak diversification

The 3 months correlation between Jacobs and A2Z is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and A2Z Smart Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2Z Smart Technologies 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 A2Z Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2Z Smart Technologies has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and A2Z Smart go up and down completely randomly.

Pair Corralation between Jacobs Solutions and A2Z Smart

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 15.27 times less return on investment than A2Z Smart. But when comparing it to its historical volatility, Jacobs Solutions is 5.14 times less risky than A2Z Smart. It trades about 0.08 of its potential returns per unit of risk. A2Z Smart Technologies is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  94.00  in A2Z Smart Technologies on September 22, 2024 and sell it today you would earn a total of  594.00  from holding A2Z Smart Technologies or generate 631.91% return on investment over 90 days.

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

Jacobs Solutions  vs.  A2Z Smart Technologies

Jacobs Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

A2Z Smart Technologies

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, A2Z Smart showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and A2Z Smart

The main advantage of trading using opposite Jacobs Solutions and A2Z Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, A2Z Smart 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 A2Z Smart will offset losses from the drop in A2Z Smart's long position.

The idea behind Jacobs Solutions and A2Z Smart Technologies 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.