Correlation Between JB Hunt and Flow Traders

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

By analyzing existing cross correlation between JB Hunt Transport and Flow Traders NV, you can compare the effects of market volatilities on JB Hunt and Flow Traders 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 JB Hunt with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and Flow Traders.

Diversification Opportunities for JB Hunt and Flow Traders

0.26

Correlation Coefficient

JB Hunt  Flow Traders

Modest diversification

The 3 months correlation between 0J71 and Flow is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV and JB Hunt 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 JB Hunt Transport are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of JB Hunt i.e., JB Hunt and Flow Traders go up and down completely randomly.

Pair Corralation between JB Hunt and Flow Traders

Assuming the 90 days trading horizon JB Hunt Transport is expected to under-perform the Flow Traders. But the stock apears to be less risky and, when comparing its historical volatility, JB Hunt Transport is 1.29 times less risky than Flow Traders. The stock trades about -0.39 of its potential returns per unit of risk. The Flow Traders NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,106  in Flow Traders NV on September 28, 2024 and sell it today you would earn a total of  29.00  from holding Flow Traders NV or generate 1.38% return on investment over 90 days.

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

JB Hunt Transport  vs.  Flow Traders NV

JB Hunt Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JB Hunt Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JB Hunt is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Flow Traders NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JB Hunt and Flow Traders

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

The idea behind JB Hunt Transport and Flow Traders NV 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 Transaction History module to view history of all your transactions and understand their impact on performance.