Correlation Between CNH Industrial and JB Hunt
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and JB Hunt 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 CNH Industrial and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and JB Hunt Transport, you can compare the effects of market volatilities on CNH Industrial and JB Hunt 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 CNH Industrial with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and JB Hunt.
Diversification Opportunities for CNH Industrial and JB Hunt
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNH and 0J71 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and JB Hunt Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hunt Transport and CNH Industrial 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 CNH Industrial NV are associated (or correlated) with JB Hunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hunt Transport has no effect on the direction of CNH Industrial i.e., CNH Industrial and JB Hunt go up and down completely randomly.
Pair Corralation between CNH Industrial and JB Hunt
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.85 times more return on investment than JB Hunt. However, CNH Industrial is 1.85 times more volatile than JB Hunt Transport. It trades about 0.06 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.09 per unit of risk. If you would invest 1,055 in CNH Industrial NV on September 13, 2024 and sell it today you would earn a total of 90.00 from holding CNH Industrial NV or generate 8.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
CNH Industrial NV vs. JB Hunt Transport
Performance |
Timeline |
CNH Industrial NV |
JB Hunt Transport |
CNH Industrial and JB Hunt Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CNH Industrial and JB Hunt
The main advantage of trading using opposite CNH Industrial and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, JB Hunt 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 JB Hunt will offset losses from the drop in JB Hunt's long position.CNH Industrial vs. JB Hunt Transport | CNH Industrial vs. Batm Advanced Communications | CNH Industrial vs. Thor Mining PLC | CNH Industrial vs. Hochschild Mining plc |
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Check out your portfolio center.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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