Correlation Between Corning Incorporated and Jabil Circuit

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

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

Diversification Opportunities for Corning Incorporated and Jabil Circuit

0.94

Correlation Coefficient

Corning Incorporated  Jabil Circuit

Almost no diversification

The 3 months correlation between Corning and Jabil is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Corning Incorporated 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 Corning Incorporated are associated (or correlated) with Jabil Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jabil Circuit has no effect on the direction of Corning Incorporated i.e., Corning Incorporated and Jabil Circuit go up and down completely randomly.

Pair Corralation between Corning Incorporated and Jabil Circuit

Considering the 90-day investment horizon Corning Incorporated is expected to generate 1.5 times less return on investment than Jabil Circuit. But when comparing it to its historical volatility, Corning Incorporated is 1.5 times less risky than Jabil Circuit. It trades about 0.21 of its potential returns per unit of risk. Jabil Circuit is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  10,335  in Jabil Circuit on September 2, 2024 and sell it today you would earn a total of  3,248  from holding Jabil Circuit or generate 31.43% return on investment over 90 days.

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

Corning Incorporated  vs.  Jabil Circuit

Corning Incorporated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Jabil Circuit

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Jabil Circuit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corning Incorporated and Jabil Circuit

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

The idea behind Corning Incorporated and Jabil Circuit 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.