Correlation Between Aerojet Rocketdyne and Jabil Circuit

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Can any of the company-specific risk be diversified away by investing in both Aerojet Rocketdyne 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 Aerojet Rocketdyne and Jabil Circuit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Jabil Circuit, you can compare the effects of market volatilities on Aerojet Rocketdyne 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 Aerojet Rocketdyne with a short position of Jabil Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Jabil Circuit.

Diversification Opportunities for Aerojet Rocketdyne and Jabil Circuit

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aerojet and Jabil is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings 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 Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Jabil Circuit go up and down completely randomly.

Pair Corralation between Aerojet Rocketdyne and Jabil Circuit

If you would invest  5,799  in Aerojet Rocketdyne Holdings on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Aerojet Rocketdyne Holdings or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

Aerojet Rocketdyne Holdings  vs.  Jabil Circuit

 Performance 
       Timeline  
Aerojet Rocketdyne 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aerojet Rocketdyne Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Aerojet Rocketdyne is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Jabil Circuit 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jabil Circuit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Jabil Circuit is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Aerojet Rocketdyne and Jabil Circuit Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerojet Rocketdyne and Jabil Circuit

The main advantage of trading using opposite Aerojet Rocketdyne and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings 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.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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