Correlation Between Celestica and Fabrinet
Can any of the company-specific risk be diversified away by investing in both Celestica and Fabrinet 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 Celestica and Fabrinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and Fabrinet, you can compare the effects of market volatilities on Celestica and Fabrinet 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 Celestica with a short position of Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and Fabrinet.
Diversification Opportunities for Celestica and Fabrinet
Very good diversification
The 3 months correlation between Celestica and Fabrinet is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and Celestica 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 Celestica are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Celestica i.e., Celestica and Fabrinet go up and down completely randomly.
Pair Corralation between Celestica and Fabrinet
Considering the 90-day investment horizon Celestica is expected to generate 0.82 times more return on investment than Fabrinet. However, Celestica is 1.21 times less risky than Fabrinet. It trades about 0.22 of its potential returns per unit of risk. Fabrinet is currently generating about 0.08 per unit of risk. If you would invest 1,120 in Celestica on January 19, 2024 and sell it today you would earn a total of 3,261 from holding Celestica or generate 291.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Celestica vs. Fabrinet
Performance |
| Timeline |
| Celestica |
| Fabrinet |
Celestica and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and Fabrinet
The main advantage of trading using opposite Celestica and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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