Correlation Between SigmaTron International and Jabil Circuit

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

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

Diversification Opportunities for SigmaTron International and Jabil Circuit

0.24

Correlation Coefficient

SigmaTron International  Jabil Circuit

Modest diversification

The 3 months correlation between SigmaTron and Jabil is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SigmaTron International and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and SigmaTron International 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 SigmaTron International 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 SigmaTron International i.e., SigmaTron International and Jabil Circuit go up and down completely randomly.

Pair Corralation between SigmaTron International and Jabil Circuit

Given the investment horizon of 90 days SigmaTron International is expected to under-perform the Jabil Circuit. In addition to that, SigmaTron International is 1.76 times more volatile than Jabil Circuit. It trades about -0.05 of its total potential returns per unit of risk. Jabil Circuit is currently generating about 0.01 per unit of volatility. If you would invest  14,560  in Jabil Circuit on December 22, 2024 and sell it today you would lose (38.00) from holding Jabil Circuit or give up 0.26% of portfolio value over 90 days.

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

SigmaTron International  vs.  Jabil Circuit

SigmaTron International

Risk-Adjusted Performance

Very Weak

Over the last 90 days SigmaTron International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with SigmaTron International and Jabil Circuit

The main advantage of trading using opposite SigmaTron International and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SigmaTron International 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 SigmaTron International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.