Correlation Between COLGATE and Jabil Circuit

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

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

Diversification Opportunities for COLGATE and Jabil Circuit

-0.63

Correlation Coefficient

COLGATE  Jabil Circuit

Excellent diversification

The 3 months correlation between COLGATE and Jabil is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding COLGATE PALMOLIVE MEDIUM TERM and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and COLGATE 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 COLGATE PALMOLIVE MEDIUM TERM 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 COLGATE i.e., COLGATE and Jabil Circuit go up and down completely randomly.

Pair Corralation between COLGATE and Jabil Circuit

Assuming the 90 days trading horizon COLGATE PALMOLIVE MEDIUM TERM is expected to under-perform the Jabil Circuit. But the bond apears to be less risky and, when comparing its historical volatility, COLGATE PALMOLIVE MEDIUM TERM is 1.19 times less risky than Jabil Circuit. The bond trades about 0.0 of its potential returns per unit of risk. The Jabil Circuit is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  12,657  in Jabil Circuit on September 26, 2024 and sell it today you would earn a total of  2,120  from holding Jabil Circuit or generate 16.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	76.19%
Values	Daily Returns

COLGATE PALMOLIVE MEDIUM TERM  vs.  Jabil Circuit

COLGATE PALMOLIVE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COLGATE PALMOLIVE MEDIUM TERM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, COLGATE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jabil Circuit

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 11 (%) 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 COLGATE and Jabil Circuit

The main advantage of trading using opposite COLGATE and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLGATE 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 COLGATE PALMOLIVE MEDIUM TERM 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.