Correlation Between Matrix Service and Jacobs Solutions

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

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

Diversification Opportunities for Matrix Service and Jacobs Solutions

0.69

Correlation Coefficient

Matrix Service  Jacobs Solutions

Poor diversification

The 3 months correlation between Matrix and Jacobs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions and Matrix Service 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 Matrix Service Co 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 Matrix Service i.e., Matrix Service and Jacobs Solutions go up and down completely randomly.

Pair Corralation between Matrix Service and Jacobs Solutions

Given the investment horizon of 90 days Matrix Service Co is expected to generate 2.51 times more return on investment than Jacobs Solutions. However, Matrix Service is 2.51 times more volatile than Jacobs Solutions. It trades about 0.06 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.06 per unit of risk. If you would invest  602.00  in Matrix Service Co on September 4, 2024 and sell it today you would earn a total of  738.00  from holding Matrix Service Co or generate 122.59% return on investment over 90 days.

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

Matrix Service Co  vs.  Jacobs Solutions

Matrix Service

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Matrix Service showed solid returns over the last few months and may actually be approaching a breakup point.

Jacobs Solutions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 11 (%) 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 Matrix Service and Jacobs Solutions

The main advantage of trading using opposite Matrix Service and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matrix Service 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 Matrix Service Co 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.