Correlation Between Jacobs Solutions and Weibo Corp

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

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

Diversification Opportunities for Jacobs Solutions and Weibo Corp

-0.48

Correlation Coefficient

Jacobs Solutions  Weibo Corp

Very good diversification

The 3 months correlation between Jacobs and Weibo is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Weibo Corp go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Weibo Corp

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.55 times more return on investment than Weibo Corp. However, Jacobs Solutions is 1.83 times less risky than Weibo Corp. It trades about 0.01 of its potential returns per unit of risk. Weibo Corp is currently generating about 0.0 per unit of risk. If you would invest  14,120  in Jacobs Solutions on October 26, 2024 and sell it today you would earn a total of  38.00  from holding Jacobs Solutions or generate 0.27% 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.  Weibo Corp

Jacobs Solutions

Risk-Adjusted Performance

0 of 100

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.

Weibo Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Weibo Corp 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 Weibo Corp

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

The idea behind Jacobs Solutions and Weibo Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.