Correlation Between Jacobs Solutions and Boeing

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

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

Diversification Opportunities for Jacobs Solutions and Boeing

-0.27

Correlation Coefficient

Jacobs Solutions  Boeing

Very good diversification

The 3 months correlation between Jacobs and Boeing is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Boeing go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Boeing

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 64.39 times less return on investment than Boeing. But when comparing it to its historical volatility, Jacobs Solutions is 1.7 times less risky than Boeing. It trades about 0.02 of its potential returns per unit of risk. The Boeing is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest  14,341  in The Boeing on September 22, 2024 and sell it today you would earn a total of  3,394  from holding The Boeing or generate 23.67% return on investment over 90 days.

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

Jacobs Solutions  vs.  The Boeing

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.

Boeing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Boeing

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

The idea behind Jacobs Solutions and The Boeing 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.