Correlation Between Weibo Corp and Jacobs Solutions

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

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

Diversification Opportunities for Weibo Corp and Jacobs Solutions

-0.48

Correlation Coefficient

Weibo Corp  Jacobs Solutions

Very good diversification

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

Pair Corralation between Weibo Corp and Jacobs Solutions

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Jacobs Solutions. In addition to that, Weibo Corp is 1.83 times more volatile than Jacobs Solutions. It trades about 0.0 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about 0.01 per unit of volatility. If you would invest  14,120  in Jacobs Solutions on October 26, 2024 and sell it today you would earn a total of  38.00  from holding Jacobs Solutions or generate 0.27% return on investment over 90 days.

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

Weibo Corp  vs.  Jacobs Solutions

Weibo Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Weibo Corp 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

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 Weibo Corp and Jacobs Solutions

The main advantage of trading using opposite Weibo Corp and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp 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 Weibo Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.