Correlation Between Jabil Circuit and Crane

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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

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Jabil and Crane is 0.73. 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 generate 1.21 times more return on investment than Crane. However, Jabil Circuit is 1.21 times more volatile than Crane Company. It trades about 0.4 of its potential returns per unit of risk. Crane Company is currently generating about 0.43 per unit of risk. If you would invest  6,727  in Jabil Circuit on October 29, 2022 and sell it today you would earn a total of  1,101  from holding Jabil Circuit or generate 16.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Jabil Circuit  vs.  Crane Company

 Performance (%) 
       Timeline  
Jabil Circuit 
Jabil Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental drivers, Jabil Circuit revealed solid returns over the last few months and may actually be approaching a breakup point.

Jabil Price Channel

Crane Company 
Crane Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Crane Price Channel

Jabil Circuit and Crane Volatility Contrast

   Predicted Return Density   
       Returns  

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.
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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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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