Correlation Between BP Prudhoe and Jabil

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

By analyzing existing cross correlation between BP Prudhoe Bay and Jabil Inc, you can compare the effects of market volatilities on BP Prudhoe and Jabil 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 BP Prudhoe with a short position of Jabil. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Prudhoe and Jabil.

Diversification Opportunities for BP Prudhoe and Jabil

-0.47

Correlation Coefficient

BP Prudhoe  Jabil

Very good diversification

The 3 months correlation between BMI and Jabil is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and Jabil Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Inc and BP Prudhoe 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 BP Prudhoe Bay are associated (or correlated) with Jabil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jabil Inc has no effect on the direction of BP Prudhoe i.e., BP Prudhoe and Jabil go up and down completely randomly.

Pair Corralation between BP Prudhoe and Jabil

Assuming the 90 days horizon BP Prudhoe Bay is expected to under-perform the Jabil. In addition to that, BP Prudhoe is 3.22 times more volatile than Jabil Inc. It trades about -0.04 of its total potential returns per unit of risk. Jabil Inc is currently generating about 0.18 per unit of volatility. If you would invest  10,218  in Jabil Inc on September 23, 2024 and sell it today you would earn a total of  3,252  from holding Jabil Inc or generate 31.83% return on investment over 90 days.

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

BP Prudhoe Bay  vs.  Jabil Inc

BP Prudhoe Bay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Jabil Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jabil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BP Prudhoe and Jabil

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

The idea behind BP Prudhoe Bay and Jabil Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.