Correlation Between Genpact and Jacobs Solutions

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

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

Diversification Opportunities for Genpact and Jacobs Solutions

0.44

Correlation Coefficient

Genpact  Jacobs Solutions

Very weak diversification

The 3 months correlation between Genpact and Jacobs is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Genpact 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 Genpact Limited 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 Genpact i.e., Genpact and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Genpact and Jacobs Solutions

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.06 times more return on investment than Jacobs Solutions. However, Genpact is 1.06 times more volatile than Jacobs Solutions. It trades about 0.17 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.13 per unit of risk. If you would invest  3,884  in Genpact Limited on September 4, 2024 and sell it today you would earn a total of  745.00  from holding Genpact Limited or generate 19.18% return on investment over 90 days.

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

Genpact Limited  vs.  Jacobs Solutions

Genpact Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact reported solid returns over the last few months and may actually be approaching a breakup point.

Jacobs Solutions

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and Jacobs Solutions

The main advantage of trading using opposite Genpact and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact 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 Genpact Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.