Correlation Between Jabil Circuit and Dennys Corp

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

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

Diversification Opportunities for Jabil Circuit and Dennys Corp

-0.08

Correlation Coefficient

Jabil Circuit  Dennys Corp

Good diversification

The 3 months correlation between Jabil and Dennys is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Jabil Circuit 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 Jabil Circuit are associated (or correlated) with Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and Dennys Corp go up and down completely randomly.

Pair Corralation between Jabil Circuit and Dennys Corp

Considering the 90-day investment horizon Jabil Circuit is expected to generate 0.57 times more return on investment than Dennys Corp. However, Jabil Circuit is 1.77 times less risky than Dennys Corp. It trades about 0.18 of its potential returns per unit of risk. Dennys Corp is currently generating about -0.02 per unit of risk. If you would invest  11,336  in Jabil Circuit on September 25, 2024 and sell it today you would earn a total of  3,164  from holding Jabil Circuit or generate 27.91% return on investment over 90 days.

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

Jabil Circuit  vs.  Dennys Corp

Jabil Circuit

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental drivers, Jabil Circuit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dennys Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dennys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dennys Corp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Jabil Circuit and Dennys Corp

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

The idea behind Jabil Circuit and Dennys 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.