Correlation Between Jacobs Solutions and BKV

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

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

Diversification Opportunities for Jacobs Solutions and BKV

-0.6

Correlation Coefficient

Jacobs Solutions  BKV

Excellent diversification

The 3 months correlation between Jacobs and BKV is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation 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 BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and BKV go up and down completely randomly.

Pair Corralation between Jacobs Solutions and BKV

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 2.95 times less return on investment than BKV. But when comparing it to its historical volatility, Jacobs Solutions is 2.05 times less risky than BKV. It trades about 0.27 of its potential returns per unit of risk. BKV Corporation is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  2,255  in BKV Corporation on October 25, 2024 and sell it today you would earn a total of  301.00  from holding BKV Corporation or generate 13.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Jacobs Solutions  vs.  BKV Corp.

Jacobs Solutions

Risk-Adjusted Performance

1 of 100

Very 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.

BKV Corporation

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and BKV

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

The idea behind Jacobs Solutions and BKV Corporation 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.