Correlation Between Jacobs Solutions and Omni Health

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

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

Diversification Opportunities for Jacobs Solutions and Omni Health

0.0

Correlation Coefficient

Jacobs Solutions  Omni Health

Pay attention - limited upside

The 3 months correlation between Jacobs and Omni is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Omni Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Health 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 Omni Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Health has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Omni Health go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Omni Health

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Omni Health. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 113.09 times less risky than Omni Health. The stock trades about -0.13 of its potential returns per unit of risk. The Omni Health is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Omni Health on December 17, 2024 and sell it today you would earn a total of  0.00  from holding Omni Health or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Jacobs Solutions  vs.  Omni Health

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.

Omni Health

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Omni Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Omni Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Omni Health

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

The idea behind Jacobs Solutions and Omni Health 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.