Correlation Between Kimball Electronics and Jabil Circuit

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

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

Diversification Opportunities for Kimball Electronics and Jabil Circuit

-0.62

Correlation Coefficient

Kimball Electronics  Jabil Circuit

Excellent diversification

The 3 months correlation between Kimball and Jabil is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Kimball Electronics 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 Kimball Electronics 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 Kimball Electronics i.e., Kimball Electronics and Jabil Circuit go up and down completely randomly.

Pair Corralation between Kimball Electronics and Jabil Circuit

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Jabil Circuit. But the stock apears to be less risky and, when comparing its historical volatility, Kimball Electronics is 1.21 times less risky than Jabil Circuit. The stock trades about -0.11 of its potential returns per unit of risk. The Jabil Circuit is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  13,513  in Jabil Circuit on December 1, 2024 and sell it today you would earn a total of  1,979  from holding Jabil Circuit or generate 14.65% return on investment over 90 days.

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

Kimball Electronics  vs.  Jabil Circuit

Kimball Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kimball Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Jabil Circuit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Jabil Circuit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kimball Electronics and Jabil Circuit

The main advantage of trading using opposite Kimball Electronics and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics 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 Kimball Electronics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.