Correlation Between Jacobs Solutions and Vishay Intertechnology

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

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

Diversification Opportunities for Jacobs Solutions and Vishay Intertechnology

-0.1

Correlation Coefficient

Jacobs Solutions  Vishay Intertechnology

Good diversification

The 3 months correlation between Jacobs and Vishay is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Vishay Intertechnology

Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.64 times more return on investment than Vishay Intertechnology. However, Jacobs Solutions is 1.56 times less risky than Vishay Intertechnology. It trades about 0.05 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.03 per unit of risk. If you would invest  13,063  in Jacobs Solutions on September 28, 2024 and sell it today you would earn a total of  561.00  from holding Jacobs Solutions or generate 4.29% return on investment over 90 days.

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

Jacobs Solutions  vs.  Vishay Intertechnology

Jacobs Solutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 4 (%) 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.

Vishay Intertechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Jacobs Solutions and Vishay Intertechnology

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

The idea behind Jacobs Solutions and Vishay Intertechnology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.