Correlation Between Jacobs Solutions and Safe Bulkers

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

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

Diversification Opportunities for Jacobs Solutions and Safe Bulkers

-0.55

Correlation Coefficient

Jacobs Solutions  Safe Bulkers

Excellent diversification

The 3 months correlation between Jacobs and Safe is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers 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 Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Safe Bulkers go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Safe Bulkers

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.82 times more return on investment than Safe Bulkers. However, Jacobs Solutions is 1.23 times less risky than Safe Bulkers. It trades about 0.15 of its potential returns per unit of risk. Safe Bulkers is currently generating about -0.18 per unit of risk. If you would invest  12,261  in Jacobs Solutions on September 1, 2024 and sell it today you would earn a total of  1,862  from holding Jacobs Solutions or generate 15.19% 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.  Safe Bulkers

Jacobs Solutions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions revealed solid returns over the last few months and may actually be approaching a breakup point.

Safe Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jacobs Solutions and Safe Bulkers

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

The idea behind Jacobs Solutions and Safe Bulkers 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.