Correlation Between Western Acquisition and Jacobs Solutions

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

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

Diversification Opportunities for Western Acquisition and Jacobs Solutions

0.57

Correlation Coefficient

Western Acquisition  Jacobs Solutions

Very weak diversification

The 3 months correlation between Western and Jacobs is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Western Acquisition and Jacobs Solutions

Given the investment horizon of 90 days Western Acquisition is expected to generate 2.85 times less return on investment than Jacobs Solutions. In addition to that, Western Acquisition is 1.31 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 0.06 per unit of volatility. If you would invest  12,883  in Jacobs Solutions on September 26, 2024 and sell it today you would earn a total of  717.00  from holding Jacobs Solutions or generate 5.57% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Jacobs Solutions

Western Acquisition

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Jacobs Solutions

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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 Western Acquisition and Jacobs Solutions

The main advantage of trading using opposite Western Acquisition and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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 Western Acquisition Ventures 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.