Correlation Between JB Hunt and Power Metal

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

Diversification Opportunities for JB Hunt and Power Metal

-0.56

Correlation Coefficient

JB Hunt  Power Metal

Excellent diversification

The 3 months correlation between 0J71 and Power is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources 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 Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of JB Hunt i.e., JB Hunt and Power Metal go up and down completely randomly.

Pair Corralation between JB Hunt and Power Metal

Assuming the 90 days trading horizon JB Hunt Transport is expected to generate 0.46 times more return on investment than Power Metal. However, JB Hunt Transport is 2.17 times less risky than Power Metal. It trades about 0.06 of its potential returns per unit of risk. Power Metal Resources is currently generating about 0.03 per unit of risk. If you would invest  16,878  in JB Hunt Transport on September 18, 2024 and sell it today you would earn a total of  1,034  from holding JB Hunt Transport or generate 6.13% return on investment over 90 days.

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

JB Hunt Transport  vs.  Power Metal Resources

JB Hunt Transport

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JB Hunt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Power Metal Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metal Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Power Metal is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JB Hunt and Power Metal

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

The idea behind JB Hunt Transport and Power Metal Resources 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..