Correlation Between Jacobs Solutions and Pinterest

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

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

Diversification Opportunities for Jacobs Solutions and Pinterest

0.25

Correlation Coefficient

Jacobs Solutions  Pinterest

Modest diversification

The 3 months correlation between Jacobs and Pinterest is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Pinterest go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Pinterest

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.53 times more return on investment than Pinterest. However, Jacobs Solutions is 1.87 times less risky than Pinterest. It trades about 0.06 of its potential returns per unit of risk. Pinterest is currently generating about 0.01 per unit of risk. If you would invest  11,019  in Jacobs Solutions on October 11, 2024 and sell it today you would earn a total of  2,291  from holding Jacobs Solutions or generate 20.79% 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.  Pinterest

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.

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Jacobs Solutions and Pinterest

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

The idea behind Jacobs Solutions and Pinterest 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.