Correlation Between JB Hunt and Electrocomponents

Can any of the company-specific risk be diversified away by investing in both JB Hunt and Electrocomponents 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 Electrocomponents 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 Electrocomponents Plc, you can compare the effects of market volatilities on JB Hunt and Electrocomponents 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 Electrocomponents. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and Electrocomponents.

Diversification Opportunities for JB Hunt and Electrocomponents

0.0

Correlation Coefficient

JB Hunt  Electrocomponents

Pay attention - limited upside

The 3 months correlation between 0J71 and Electrocomponents is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Electrocomponents Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocomponents Plc 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 Electrocomponents. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocomponents Plc has no effect on the direction of JB Hunt i.e., JB Hunt and Electrocomponents go up and down completely randomly.

Pair Corralation between JB Hunt and Electrocomponents

If you would invest (100.00) in Electrocomponents Plc on September 26, 2024 and sell it today you would earn a total of  100.00  from holding Electrocomponents Plc or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

JB Hunt Transport  vs.  Electrocomponents Plc

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.

Electrocomponents Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrocomponents Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Electrocomponents is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JB Hunt and Electrocomponents

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

The idea behind JB Hunt Transport and Electrocomponents Plc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.