Correlation Between Jabil Circuit and Sonos

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

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

Diversification Opportunities for Jabil Circuit and Sonos

-0.41

Correlation Coefficient

Jabil Circuit  Sonos

Very good diversification

The 3 months correlation between Jabil and Sonos is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and Sonos go up and down completely randomly.

Pair Corralation between Jabil Circuit and Sonos

Considering the 90-day investment horizon Jabil Circuit is expected to under-perform the Sonos. But the stock apears to be less risky and, when comparing its historical volatility, Jabil Circuit is 2.13 times less risky than Sonos. The stock trades about -0.24 of its potential returns per unit of risk. The Sonos Inc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,357  in Sonos Inc on December 4, 2024 and sell it today you would lose (74.50) from holding Sonos Inc or give up 5.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Jabil Circuit  vs.  Sonos Inc

Jabil Circuit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Sonos Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Jabil Circuit and Sonos

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

The idea behind Jabil Circuit and Sonos Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.