Correlation Between Jabil Circuit and Stepan
Can any of the company-specific risk be diversified away by investing in both Jabil Circuit and Stepan 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 Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jabil Circuit and Stepan Company, you can compare the effects of market volatilities on Jabil Circuit and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jabil Circuit and Stepan.
Diversification Opportunities for Jabil Circuit and Stepan
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jabil and Stepan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and Stepan go up and down completely randomly.
Pair Corralation between Jabil Circuit and Stepan
Considering the 90-day investment horizon Jabil Circuit is expected to generate 1.2 times more return on investment than Stepan. However, Jabil Circuit is 1.2 times more volatile than Stepan Company. It trades about 0.21 of its potential returns per unit of risk. Stepan Company is currently generating about 0.03 per unit of risk. If you would invest 10,335 in Jabil Circuit on September 3, 2024 and sell it today you would earn a total of 3,248 from holding Jabil Circuit or generate 31.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jabil Circuit vs. Stepan Company
Performance |
| Timeline |
| Jabil Circuit |
| Stepan Company |
Jabil Circuit and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jabil Circuit and Stepan
The main advantage of trading using opposite Jabil Circuit and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jabil Circuit position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Jabil Circuit vs. Sanmina | Jabil Circuit vs. Celestica | Jabil Circuit vs. Plexus Corp | Jabil Circuit vs. Fabrinet |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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