Correlation Between Analog Devices and Jabil Circuit
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and Jabil Circuit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Jabil Circuit, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of Jabil Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Jabil Circuit.
Diversification Opportunities for Analog Devices and Jabil Circuit
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Analog and Jabil is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Jabil Circuit go up and down completely randomly.
Pair Corralation between Analog Devices and Jabil Circuit
Considering the 90-day investment horizon Analog Devices is expected to generate 2.1 times less return on investment than Jabil Circuit. But when comparing it to its historical volatility, Analog Devices is 1.28 times less risky than Jabil Circuit. It trades about 0.04 of its potential returns per unit of risk. Jabil Circuit is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,046 in Jabil Circuit on August 24, 2024 and sell it today you would earn a total of 6,066 from holding Jabil Circuit or generate 86.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Jabil Circuit
Performance |
| Timeline |
| Analog Devices |
| Jabil Circuit |
Analog Devices and Jabil Circuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Jabil Circuit
The main advantage of trading using opposite Analog Devices and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.| Analog Devices vs. Eshallgo Class A | Analog Devices vs. Amtech Systems | Analog Devices vs. Gold Fields Ltd | Analog Devices vs. Aegean Airlines SA |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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