Correlation Between Wendys and Jabil Circuit

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

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

Diversification Opportunities for Wendys and Jabil Circuit

0.48

Correlation Coefficient

Wendys  Jabil Circuit

Very weak diversification

The 3 months correlation between Wendys and Jabil is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Jabil Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jabil Circuit and Wendys 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 The Wendys Co 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 Wendys i.e., Wendys and Jabil Circuit go up and down completely randomly.

Pair Corralation between Wendys and Jabil Circuit

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Jabil Circuit. In addition to that, Wendys is 1.06 times more volatile than Jabil Circuit. It trades about -0.15 of its total potential returns per unit of risk. Jabil Circuit is currently generating about 0.0 per unit of volatility. If you would invest  13,283  in Jabil Circuit on September 13, 2024 and sell it today you would lose (8.00) from holding Jabil Circuit or give up 0.06% of portfolio value over 90 days.

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

The Wendys Co  vs.  Jabil Circuit

The Wendys

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Wendys Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Wendys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Jabil Circuit

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jabil Circuit are ranked lower than 14 (%) 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 Wendys and Jabil Circuit

The main advantage of trading using opposite Wendys and Jabil Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys 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 The Wendys Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.