Correlation Between Belden and Jabil Circuit

Can any of the company-specific risk be diversified away by investing in both Belden 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 Belden and Jabil Circuit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Belden Inc and Jabil Circuit, you can compare the effects of market volatilities on Belden 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 Belden with a short position of Jabil Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and Jabil Circuit.

Diversification Opportunities for Belden and Jabil Circuit

0.56

Correlation Coefficient

Belden  Jabil Circuit

Very weak diversification

The 3 months correlation between Belden and Jabil is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Belden 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 Belden Inc 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 Belden i.e., Belden and Jabil Circuit go up and down completely randomly.

Pair Corralation between Belden and Jabil Circuit

Considering the 90-day investment horizon Belden is expected to generate 1.49 times less return on investment than Jabil Circuit. In addition to that, Belden is 1.04 times more volatile than Jabil Circuit. It trades about 0.06 of its total potential returns per unit of risk. Jabil Circuit is currently generating about 0.09 per unit of volatility. If you would invest  5,656  in Jabil Circuit on January 17, 2024 and sell it today you would earn a total of  7,610  from holding Jabil Circuit or generate 134.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Belden Inc  vs.  Jabil Circuit

Belden Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Belden exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jabil Circuit

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Jabil Circuit may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Belden and Jabil Circuit

The main advantage of trading using opposite Belden and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden 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 Belden Inc 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.