Correlation Between Summit Materials and Jabil Circuit
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Jabil Circuit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Jabil Circuit, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Jabil Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Jabil Circuit.
Diversification Opportunities for Summit Materials and Jabil Circuit
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Jabil is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Jabil Circuit go up and down completely randomly.
Pair Corralation between Summit Materials and Jabil Circuit
Considering the 90-day investment horizon Summit Materials is expected to generate 0.94 times more return on investment than Jabil Circuit. However, Summit Materials is 1.06 times less risky than Jabil Circuit. It trades about 0.11 of its potential returns per unit of risk. Jabil Circuit is currently generating about 0.05 per unit of risk. If you would invest 3,864 in Summit Materials on August 29, 2024 and sell it today you would earn a total of 1,245 from holding Summit Materials or generate 32.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Jabil Circuit
Performance |
| Timeline |
| Summit Materials |
| Jabil Circuit |
Summit Materials and Jabil Circuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Jabil Circuit
The main advantage of trading using opposite Summit Materials and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Jabil Circuit vs. Richardson Electronics | Jabil Circuit vs. Interlink Electronics | Jabil Circuit vs. SigmaTron International | Jabil Circuit vs. Ouster Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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