Correlation Between Jabil Circuit and Nova Minerals

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

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

Diversification Opportunities for Jabil Circuit and Nova Minerals

0.23

Correlation Coefficient

Jabil Circuit  Nova Minerals

Modest diversification

The 3 months correlation between Jabil and Nova is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and Nova Minerals go up and down completely randomly.

Pair Corralation between Jabil Circuit and Nova Minerals

Considering the 90-day investment horizon Jabil Circuit is expected to under-perform the Nova Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Jabil Circuit is 2.86 times less risky than Nova Minerals. The stock trades about -0.02 of its potential returns per unit of risk. The Nova Minerals Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,192  in Nova Minerals Limited on December 19, 2024 and sell it today you would lose (42.00) from holding Nova Minerals Limited or give up 3.52% of portfolio value over 90 days.

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

Jabil Circuit  vs.  Nova Minerals Limited

Jabil Circuit

Risk-Adjusted Performance

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.

Nova Minerals Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Minerals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nova Minerals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jabil Circuit and Nova Minerals

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

The idea behind Jabil Circuit and Nova Minerals Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.