Correlation Between Jabil Circuit and Empresa Distribuidora

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

By analyzing existing cross correlation between Jabil Circuit and Empresa Distribuidora y, you can compare the effects of market volatilities on Jabil Circuit and Empresa Distribuidora 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 Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jabil Circuit and Empresa Distribuidora.

Diversification Opportunities for Jabil Circuit and Empresa Distribuidora

0.71

Correlation Coefficient

Jabil Circuit  Empresa Distribuidora

Poor diversification

The 3 months correlation between Jabil and Empresa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora 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 Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and Empresa Distribuidora go up and down completely randomly.

Pair Corralation between Jabil Circuit and Empresa Distribuidora

Considering the 90-day investment horizon Jabil Circuit is expected to generate 2.56 times less return on investment than Empresa Distribuidora. But when comparing it to its historical volatility, Jabil Circuit is 1.45 times less risky than Empresa Distribuidora. It trades about 0.19 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,329  in Empresa Distribuidora y on September 12, 2024 and sell it today you would earn a total of  2,066  from holding Empresa Distribuidora y or generate 88.69% return on investment over 90 days.

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

Jabil Circuit  vs.  Empresa Distribuidora y

Jabil Circuit

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Jabil Circuit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Empresa Distribuidora

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jabil Circuit and Empresa Distribuidora

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

The idea behind Jabil Circuit and Empresa Distribuidora y 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.