Correlation Between Jacobs Solutions and GameStop Corp

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

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

Diversification Opportunities for Jacobs Solutions and GameStop Corp

-0.06

Correlation Coefficient

Jacobs Solutions  GameStop Corp

Good diversification

The 3 months correlation between Jacobs and GameStop is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop 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 GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and GameStop Corp go up and down completely randomly.

Pair Corralation between Jacobs Solutions and GameStop Corp

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the GameStop Corp. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 4.8 times less risky than GameStop Corp. The stock trades about -0.34 of its potential returns per unit of risk. The GameStop Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,252  in GameStop Corp on January 28, 2024 and sell it today you would lose (62.00) from holding GameStop Corp or give up 4.95% of portfolio value over 90 days.

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

Jacobs Solutions  vs.  GameStop Corp

Jacobs Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 6 (%) 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.

GameStop Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GameStop Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Jacobs Solutions and GameStop Corp

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

The idea behind Jacobs Solutions and GameStop 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..