Correlation Between JB Hunt and Hub

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

Diversification Opportunities for JB Hunt and Hub

0.74

Correlation Coefficient

JB Hunt  Hub

Poor diversification

The 3 months correlation between JBHT and Hub is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Hub Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Group 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 Hub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Group has no effect on the direction of JB Hunt i.e., JB Hunt and Hub go up and down completely randomly.

Pair Corralation between JB Hunt and Hub

Given the investment horizon of 90 days JB Hunt is expected to generate 1.25 times less return on investment than Hub. But when comparing it to its historical volatility, JB Hunt Transport is 1.14 times less risky than Hub. It trades about 0.1 of its potential returns per unit of risk. Hub Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,578  in Hub Group on August 31, 2024 and sell it today you would earn a total of  591.00  from holding Hub Group or generate 12.91% return on investment over 90 days.

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

JB Hunt Transport  vs.  Hub Group

JB Hunt Transport

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, JB Hunt may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hub Group

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Hub reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JB Hunt and Hub

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

The idea behind JB Hunt Transport and Hub Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.