Correlation Between Jacobs Solutions and Universal

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

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

Diversification Opportunities for Jacobs Solutions and Universal

-0.6

Correlation Coefficient

Jacobs Solutions  Universal

Excellent diversification

The 3 months correlation between Jacobs and Universal is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Universal go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Universal

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Universal. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 1.27 times less risky than Universal. The stock trades about -0.1 of its potential returns per unit of risk. The Universal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,348  in Universal on December 28, 2024 and sell it today you would earn a total of  295.00  from holding Universal or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Jacobs Solutions  vs.  Universal

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 fragile 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.

Universal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Universal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jacobs Solutions and Universal

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

The idea behind Jacobs Solutions and Universal 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..