Correlation Between Jabil Circuit and East West

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

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

Diversification Opportunities for Jabil Circuit and East West

0.02

Correlation Coefficient

Jabil Circuit  East West

Significant diversification

The 3 months correlation between Jabil and East is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Jabil Circuit and East West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Bancorp and Jabil Circuit 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 Jabil Circuit are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Bancorp has no effect on the direction of Jabil Circuit i.e., Jabil Circuit and East West go up and down completely randomly.

Pair Corralation between Jabil Circuit and East West

Considering the 90-day investment horizon Jabil Circuit is expected to under-perform the East West. In addition to that, Jabil Circuit is 1.64 times more volatile than East West Bancorp. It trades about -0.23 of its total potential returns per unit of risk. East West Bancorp is currently generating about -0.06 per unit of volatility. If you would invest  7,801  in East West Bancorp on January 31, 2024 and sell it today you would lose (156.00) from holding East West Bancorp or give up 2.0% of portfolio value over 90 days.

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

Jabil Circuit  vs.  East West Bancorp

Jabil Circuit

Risk-Adjusted Performance

0 of 100

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.

East West Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in East West Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, East West may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Jabil Circuit and East West

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

The idea behind Jabil Circuit and East West Bancorp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.