Correlation Between Matrix Service and Jacobs Solutions

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

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

Diversification Opportunities for Matrix Service and Jacobs Solutions

0.11

Correlation Coefficient

Matrix Service  Jacobs Solutions

Average diversification

The 3 months correlation between Matrix and Jacobs is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Matrix Service 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 Matrix Service Co are associated (or correlated) with Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Matrix Service i.e., Matrix Service and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Matrix Service and Jacobs Solutions

Given the investment horizon of 90 days Matrix Service Co is expected to under-perform the Jacobs Solutions. In addition to that, Matrix Service is 3.03 times more volatile than Jacobs Solutions. It trades about -0.15 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about -0.36 per unit of volatility. If you would invest  13,948  in Jacobs Solutions on December 1, 2024 and sell it today you would lose (1,137) from holding Jacobs Solutions or give up 8.15% of portfolio value over 90 days.

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

Matrix Service Co  vs.  Jacobs Solutions

Matrix Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matrix Service Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Matrix Service is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Matrix Service and Jacobs Solutions

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

The idea behind Matrix Service Co and Jacobs Solutions 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.