Correlation Between NVIDIA and Jabil

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

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

Diversification Opportunities for NVIDIA and Jabil

-0.1

Correlation Coefficient

NVIDIA  Jabil

Good diversification

The 3 months correlation between NVIDIA and Jabil is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Jabil Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Inc and NVIDIA 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 NVIDIA are associated (or correlated) with Jabil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jabil Inc has no effect on the direction of NVIDIA i.e., NVIDIA and Jabil go up and down completely randomly.

Pair Corralation between NVIDIA and Jabil

Given the investment horizon of 90 days NVIDIA is expected to generate 2.08 times less return on investment than Jabil. In addition to that, NVIDIA is 1.07 times more volatile than Jabil Inc. It trades about 0.08 of its total potential returns per unit of risk. Jabil Inc is currently generating about 0.18 per unit of volatility. If you would invest  11,103  in Jabil Inc on October 4, 2024 and sell it today you would earn a total of  2,787  from holding Jabil Inc or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

NVIDIA  vs.  Jabil Inc

NVIDIA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jabil Inc

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with NVIDIA and Jabil

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

The idea behind NVIDIA and Jabil 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.

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 the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.