Correlation Between Landstar System and JB Hunt

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

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

Diversification Opportunities for Landstar System and JB Hunt

0.38

Correlation Coefficient

Landstar System  JB Hunt

Weak diversification

The 3 months correlation between Landstar and JBHT is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Landstar System 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 Landstar System 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 Landstar System 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 Landstar System i.e., Landstar System and JB Hunt go up and down completely randomly.

Pair Corralation between Landstar System and JB Hunt

Given the investment horizon of 90 days Landstar System is expected to generate 3.47 times less return on investment than JB Hunt. But when comparing it to its historical volatility, Landstar System is 1.06 times less risky than JB Hunt. It trades about 0.03 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  17,270  in JB Hunt Transport on August 31, 2024 and sell it today you would earn a total of  1,761  from holding JB Hunt Transport or generate 10.2% return on investment over 90 days.

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

Landstar System  vs.  JB Hunt Transport

Landstar System

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Landstar System are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Landstar System is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Landstar System and JB Hunt

The main advantage of trading using opposite Landstar System and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landstar System 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 Landstar System 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.