Correlation Between Jacobs Solutions and Aduro Clean

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

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

Diversification Opportunities for Jacobs Solutions and Aduro Clean

-0.44

Correlation Coefficient

Jacobs Solutions  Aduro Clean

Very good diversification

The 3 months correlation between Jacobs and Aduro is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Aduro Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aduro Clean Technologies and Jacobs Solutions 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 Jacobs Solutions are associated (or correlated) with Aduro Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aduro Clean Technologies has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Aduro Clean go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Aduro Clean

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.37 times more return on investment than Aduro Clean. However, Jacobs Solutions is 2.69 times less risky than Aduro Clean. It trades about 0.02 of its potential returns per unit of risk. Aduro Clean Technologies is currently generating about -0.01 per unit of risk. If you would invest  13,543  in Jacobs Solutions on September 22, 2024 and sell it today you would earn a total of  32.00  from holding Jacobs Solutions or generate 0.24% return on investment over 90 days.

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

Jacobs Solutions  vs.  Aduro Clean Technologies

Jacobs Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aduro Clean Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Aduro Clean

The main advantage of trading using opposite Jacobs Solutions and Aduro Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions position performs unexpectedly, Aduro Clean 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 Aduro Clean will offset losses from the drop in Aduro Clean's long position.

The idea behind Jacobs Solutions and Aduro Clean Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.