Correlation Between Livermore Investments and JB Hunt

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

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

Diversification Opportunities for Livermore Investments and JB Hunt

0.75

Correlation Coefficient

Livermore Investments  JB Hunt

Poor diversification

The 3 months correlation between Livermore and 0J71 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group 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 Livermore Investments 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 Livermore Investments Group 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 Livermore Investments i.e., Livermore Investments and JB Hunt go up and down completely randomly.

Pair Corralation between Livermore Investments and JB Hunt

Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 0.85 times more return on investment than JB Hunt. However, Livermore Investments Group is 1.17 times less risky than JB Hunt. It trades about 0.24 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.1 per unit of risk. If you would invest  3,644  in Livermore Investments Group on September 3, 2024 and sell it today you would earn a total of  886.00  from holding Livermore Investments Group or generate 24.31% return on investment over 90 days.

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

Livermore Investments Group  vs.  JB Hunt Transport

Livermore Investments

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain basic indicators, JB Hunt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Livermore Investments and JB Hunt

The main advantage of trading using opposite Livermore Investments and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments 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 Livermore Investments Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.