Correlation Between CROWN and Jabil Circuit

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

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

Diversification Opportunities for CROWN and Jabil Circuit

0.36

Correlation Coefficient

CROWN  Jabil Circuit

Weak diversification

The 3 months correlation between CROWN and Jabil is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CROWN CASTLE INTL and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and CROWN 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 CROWN CASTLE INTL 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 CROWN i.e., CROWN and Jabil Circuit go up and down completely randomly.

Pair Corralation between CROWN and Jabil Circuit

Assuming the 90 days trading horizon CROWN CASTLE INTL is expected to under-perform the Jabil Circuit. But the bond apears to be less risky and, when comparing its historical volatility, CROWN CASTLE INTL is 3.2 times less risky than Jabil Circuit. The bond trades about -0.23 of its potential returns per unit of risk. The Jabil Circuit is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  13,644  in Jabil Circuit on October 5, 2024 and sell it today you would earn a total of  639.00  from holding Jabil Circuit or generate 4.68% return on investment over 90 days.

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

CROWN CASTLE INTL  vs.  Jabil Circuit

CROWN CASTLE INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Jabil Circuit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental drivers, Jabil Circuit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CROWN and Jabil Circuit

The main advantage of trading using opposite CROWN and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CROWN 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 CROWN CASTLE INTL 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 Global Correlations module to find global opportunities by holding instruments from different markets.