Correlation Between Jacobs Solutions and PROSHARES ULTRASHORT

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

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

Diversification Opportunities for Jacobs Solutions and PROSHARES ULTRASHORT

0.7

Correlation Coefficient

Jacobs Solutions  PROSHARES ULTRASHORT

Poor diversification

The 3 months correlation between Jacobs and PROSHARES is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and PROSHARES ULTRASHORT RUSSELL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSHARES ULTRASHORT 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 PROSHARES ULTRASHORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSHARES ULTRASHORT has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and PROSHARES ULTRASHORT go up and down completely randomly.

Pair Corralation between Jacobs Solutions and PROSHARES ULTRASHORT

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.04 times more return on investment than PROSHARES ULTRASHORT. However, Jacobs Solutions is 24.71 times less risky than PROSHARES ULTRASHORT. It trades about 0.02 of its potential returns per unit of risk. PROSHARES ULTRASHORT RUSSELL is currently generating about -0.26 per unit of risk. If you would invest  13,352  in Jacobs Solutions on September 20, 2024 and sell it today you would earn a total of  54.00  from holding Jacobs Solutions or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Jacobs Solutions  vs.  PROSHARES ULTRASHORT RUSSELL

Jacobs Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PROSHARES ULTRASHORT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSHARES ULTRASHORT RUSSELL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Etf's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with Jacobs Solutions and PROSHARES ULTRASHORT

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

The idea behind Jacobs Solutions and PROSHARES ULTRASHORT RUSSELL 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..