Correlation Between Reservoir Media and Jacobs Solutions

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

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

Diversification Opportunities for Reservoir Media and Jacobs Solutions

0.48

Correlation Coefficient

Reservoir Media  Jacobs Solutions

Very weak diversification

The 3 months correlation between Reservoir and Jacobs is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Reservoir Media 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 Reservoir Media 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 Reservoir Media i.e., Reservoir Media and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Reservoir Media and Jacobs Solutions

Given the investment horizon of 90 days Reservoir Media is expected to under-perform the Jacobs Solutions. In addition to that, Reservoir Media is 2.82 times more volatile than Jacobs Solutions. It trades about -0.02 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about -0.05 per unit of volatility. If you would invest  13,736  in Jacobs Solutions on September 23, 2024 and sell it today you would lose (161.00) from holding Jacobs Solutions or give up 1.17% of portfolio value over 90 days.

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

Reservoir Media  vs.  Jacobs Solutions

Reservoir Media

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.

Jacobs Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Reservoir Media and Jacobs Solutions

The main advantage of trading using opposite Reservoir Media and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media 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 Reservoir Media 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.