Correlation Between Check Point and JB Hunt

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

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

Diversification Opportunities for Check Point and JB Hunt

-0.59

Correlation Coefficient

Check Point  JB Hunt

Excellent diversification

The 3 months correlation between Check and 0J71 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software 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 Check Point 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 Check Point Software 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 Check Point i.e., Check Point and JB Hunt go up and down completely randomly.

Pair Corralation between Check Point and JB Hunt

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the JB Hunt. In addition to that, Check Point is 1.31 times more volatile than JB Hunt Transport. It trades about -0.01 of its total potential returns per unit of risk. JB Hunt Transport is currently generating about -0.01 per unit of volatility. If you would invest  17,226  in JB Hunt Transport on September 25, 2024 and sell it today you would lose (287.00) from holding JB Hunt Transport or give up 1.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Check Point Software  vs.  JB Hunt Transport

Check Point Software

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Check Point and JB Hunt

The main advantage of trading using opposite Check Point and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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.

The idea behind Check Point Software and JB Hunt Transport 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.