Correlation Between SIMON and Jacobs Solutions

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

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

Diversification Opportunities for SIMON and Jacobs Solutions

0.42

Correlation Coefficient

SIMON  Jacobs Solutions

Very weak diversification

The 3 months correlation between SIMON and Jacobs is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PPTY GROUP and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and SIMON 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 SIMON PPTY GROUP 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 SIMON i.e., SIMON and Jacobs Solutions go up and down completely randomly.

Pair Corralation between SIMON and Jacobs Solutions

Assuming the 90 days trading horizon SIMON PPTY GROUP is expected to generate 96.12 times more return on investment than Jacobs Solutions. However, SIMON is 96.12 times more volatile than Jacobs Solutions. It trades about 0.12 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.05 per unit of risk. If you would invest  8,606  in SIMON PPTY GROUP on October 10, 2024 and sell it today you would lose (542.00) from holding SIMON PPTY GROUP or give up 6.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	61.09%
Values	Daily Returns

SIMON PPTY GROUP  vs.  Jacobs Solutions

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PPTY GROUP 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 SIMON and Jacobs Solutions

The main advantage of trading using opposite SIMON and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMON 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 SIMON PPTY GROUP 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.