Correlation Between Jacobs Solutions and Jeld Wen

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

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

Diversification Opportunities for Jacobs Solutions and Jeld Wen

0.38

Correlation Coefficient

Jacobs Solutions  Jeld Wen

Weak diversification

The 3 months correlation between Jacobs and Jeld is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Jacobs Solutions i.e., Jacobs Solutions and Jeld Wen go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Jeld Wen

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Jeld Wen. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 4.97 times less risky than Jeld Wen. The stock trades about -0.27 of its potential returns per unit of risk. The Jeld Wen Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,118  in Jeld Wen Holding on January 29, 2024 and sell it today you would earn a total of  22.00  from holding Jeld Wen Holding or generate 1.04% 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.  Jeld Wen Holding

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.

Jeld Wen Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jeld Wen Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Jeld Wen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacobs Solutions and Jeld Wen

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

The idea behind Jacobs Solutions and Jeld Wen Holding 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.