Correlation Between ALTRIA and Jacobs Solutions

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

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

Diversification Opportunities for ALTRIA and Jacobs Solutions

0.11

Correlation Coefficient

ALTRIA  Jacobs Solutions

Average diversification

The 3 months correlation between ALTRIA and Jacobs is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ALTRIA GROUP INC and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and ALTRIA 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 ALTRIA GROUP INC 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 ALTRIA i.e., ALTRIA and Jacobs Solutions go up and down completely randomly.

Pair Corralation between ALTRIA and Jacobs Solutions

Assuming the 90 days trading horizon ALTRIA GROUP INC is expected to under-perform the Jacobs Solutions. But the bond apears to be less risky and, when comparing its historical volatility, ALTRIA GROUP INC is 4.04 times less risky than Jacobs Solutions. The bond trades about -0.04 of its potential returns per unit of risk. The Jacobs Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  14,146  in Jacobs Solutions on October 24, 2024 and sell it today you would earn a total of  18.00  from holding Jacobs Solutions or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ALTRIA GROUP INC  vs.  Jacobs Solutions

ALTRIA GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTRIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALTRIA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with ALTRIA and Jacobs Solutions

The main advantage of trading using opposite ALTRIA and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTRIA 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 ALTRIA GROUP INC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.