Correlation Between Jacobs Solutions and Bloom Energy

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

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

Diversification Opportunities for Jacobs Solutions and Bloom Energy

0.23

Correlation Coefficient

Jacobs Solutions  Bloom Energy

Modest diversification

The 3 months correlation between Jacobs and Bloom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy Corp 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 Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Bloom Energy go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Bloom Energy

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 1.85 times less return on investment than Bloom Energy. But when comparing it to its historical volatility, Jacobs Solutions is 3.59 times less risky than Bloom Energy. It trades about 0.05 of its potential returns per unit of risk. Bloom Energy Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,326  in Bloom Energy Corp on September 4, 2024 and sell it today you would earn a total of  288.00  from holding Bloom Energy Corp or generate 12.38% return on investment over 90 days.

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

Jacobs Solutions  vs.  Bloom Energy Corp

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.

Bloom Energy Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Bloom Energy

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

The idea behind Jacobs Solutions and Bloom Energy Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.