Correlation Between Jacobs Solutions and VHAI

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

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

Diversification Opportunities for Jacobs Solutions and VHAI

-0.36

Correlation Coefficient

Jacobs Solutions  VHAI

Very good diversification

The 3 months correlation between Jacobs and VHAI is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI 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 VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and VHAI go up and down completely randomly.

Pair Corralation between Jacobs Solutions and VHAI

If you would invest  0.57  in VHAI on October 5, 2024 and sell it today you would earn a total of  0.00  from holding VHAI or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Jacobs Solutions  vs.  VHAI

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.

VHAI

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly fragile basic indicators, VHAI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and VHAI

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

The idea behind Jacobs Solutions and VHAI 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.