Correlation Between Jabil Circuit and Crane

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

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

Diversification Opportunities for Jabil Circuit and Crane

0.14

Correlation Coefficient

Jabil Circuit  Crane

Average diversification

The 3 months correlation between Jabil and Crane is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and Crane go up and down completely randomly.

Pair Corralation between Jabil Circuit and Crane

Considering the 90-day investment horizon Jabil Circuit is expected to under-perform the Crane. In addition to that, Jabil Circuit is 1.36 times more volatile than Crane Company. It trades about -0.15 of its total potential returns per unit of risk. Crane Company is currently generating about 0.15 per unit of volatility. If you would invest  13,424  in Crane Company on January 25, 2024 and sell it today you would earn a total of  789.00  from holding Crane Company or generate 5.88% return on investment over 90 days.

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

Jabil Circuit  vs.  Crane Company

Jabil Circuit

Risk-Adjusted Performance

0 of 100

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.

Crane Company

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jabil Circuit and Crane

The main advantage of trading using opposite Jabil Circuit and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jabil Circuit position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.

The idea behind Jabil Circuit and Crane Company 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.