Correlation Between London Security and JB Hunt
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and JB Hunt Transport, you can compare the effects of market volatilities on London Security 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 London Security with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and JB Hunt.
Diversification Opportunities for London Security and JB Hunt
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between London and 0J71 is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc 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 London Security 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 London Security Plc 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 London Security i.e., London Security and JB Hunt go up and down completely randomly.
Pair Corralation between London Security and JB Hunt
Assuming the 90 days trading horizon London Security Plc is expected to generate 0.74 times more return on investment than JB Hunt. However, London Security Plc is 1.36 times less risky than JB Hunt. It trades about 0.06 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.04 per unit of risk. If you would invest 308,096 in London Security Plc on September 25, 2024 and sell it today you would earn a total of 31,904 from holding London Security Plc or generate 10.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.22% |
Values | Daily Returns |
London Security Plc vs. JB Hunt Transport
Performance |
Timeline |
London Security Plc |
JB Hunt Transport |
London Security and JB Hunt Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with London Security and JB Hunt
The main advantage of trading using opposite London Security and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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