Correlation Between Jabil Circuit and LGL

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

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

Diversification Opportunities for Jabil Circuit and LGL

0.02

Correlation Coefficient

Jabil Circuit  LGL

Significant diversification

The 3 months correlation between Jabil and LGL is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and LGL Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGL Group 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 LGL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGL Group has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and LGL go up and down completely randomly.

Pair Corralation between Jabil Circuit and LGL

Considering the 90-day investment horizon Jabil Circuit is expected to generate 0.62 times more return on investment than LGL. However, Jabil Circuit is 1.63 times less risky than LGL. It trades about 0.21 of its potential returns per unit of risk. LGL Group is currently generating about 0.01 per unit of risk. If you would invest  10,354  in Jabil Circuit on September 4, 2024 and sell it today you would earn a total of  3,165  from holding Jabil Circuit or generate 30.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Jabil Circuit  vs.  LGL Group

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.

LGL Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days LGL Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, LGL is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jabil Circuit and LGL

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

The idea behind Jabil Circuit and LGL Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.