Correlation Between Digital Realty and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Digital Realty 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 Digital Realty and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Realty Trust and JB Hunt Transport, you can compare the effects of market volatilities on Digital Realty 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 Digital Realty with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and JB Hunt.
Diversification Opportunities for Digital Realty and JB Hunt
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digital and 0J71 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust 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 Digital Realty 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 Digital Realty Trust 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 Digital Realty i.e., Digital Realty and JB Hunt go up and down completely randomly.
Pair Corralation between Digital Realty and JB Hunt
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 0.7 times more return on investment than JB Hunt. However, Digital Realty Trust is 1.42 times less risky than JB Hunt. It trades about 0.21 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.11 per unit of risk. If you would invest 18,333 in Digital Realty Trust on August 31, 2024 and sell it today you would earn a total of 1,204 from holding Digital Realty Trust or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. JB Hunt Transport
Performance |
| Timeline |
| Digital Realty Trust |
| JB Hunt Transport |
Digital Realty and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and JB Hunt
The main advantage of trading using opposite Digital Realty and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty 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.| Digital Realty vs. Westlake Chemical Corp | Digital Realty vs. Panther Metals PLC | Digital Realty vs. Futura Medical | Digital Realty vs. Golden Metal Resources |
| JB Hunt vs. Neometals | JB Hunt vs. Coor Service Management | JB Hunt vs. Aeorema Communications Plc | JB Hunt vs. JLEN Environmental Assets |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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