Correlation Between Jacobs Solutions and VARNO

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

By analyzing existing cross correlation between Jacobs Solutions and VARNO 75 15 JAN 28, you can compare the effects of market volatilities on Jacobs Solutions and VARNO 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 VARNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and VARNO.

Diversification Opportunities for Jacobs Solutions and VARNO

0.18

Correlation Coefficient

Jacobs Solutions  VARNO

Average diversification

The 3 months correlation between Jacobs and VARNO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and VARNO 75 15 JAN 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARNO 75 15 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 VARNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARNO 75 15 has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and VARNO go up and down completely randomly.

Pair Corralation between Jacobs Solutions and VARNO

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the VARNO. In addition to that, Jacobs Solutions is 5.21 times more volatile than VARNO 75 15 JAN 28. It trades about -0.11 of its total potential returns per unit of risk. VARNO 75 15 JAN 28 is currently generating about 0.15 per unit of volatility. If you would invest  10,547  in VARNO 75 15 JAN 28 on December 27, 2024 and sell it today you would earn a total of  137.00  from holding VARNO 75 15 JAN 28 or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

Jacobs Solutions  vs.  VARNO 75 15 JAN 28

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.

VARNO 75 15

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VARNO 75 15 JAN 28 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, VARNO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jacobs Solutions and VARNO

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

The idea behind Jacobs Solutions and VARNO 75 15 JAN 28 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.