Correlation Between Jacobs Solutions and Lifevantage

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

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

Diversification Opportunities for Jacobs Solutions and Lifevantage

-0.4

Correlation Coefficient

Jacobs Solutions  Lifevantage

Very good diversification

The 3 months correlation between Jacobs and Lifevantage is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Lifevantage go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Lifevantage

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Lifevantage. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 6.27 times less risky than Lifevantage. The stock trades about -0.14 of its potential returns per unit of risk. The Lifevantage is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,428  in Lifevantage on October 9, 2024 and sell it today you would earn a total of  246.00  from holding Lifevantage or generate 17.23% return on investment over 90 days.

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

Jacobs Solutions  vs.  Lifevantage

Jacobs Solutions

Risk-Adjusted Performance

0 of 100

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 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.

Lifevantage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Lifevantage

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

The idea behind Jacobs Solutions and Lifevantage 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.