Correlation Between JB Hunt and CVS Health
Can any of the company-specific risk be diversified away by investing in both JB Hunt and CVS Health 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 CVS Health 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 CVS Health Corp, you can compare the effects of market volatilities on JB Hunt and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and CVS Health.
Diversification Opportunities for JB Hunt and CVS Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0J71 and CVS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of JB Hunt i.e., JB Hunt and CVS Health go up and down completely randomly.
Pair Corralation between JB Hunt and CVS Health
Assuming the 90 days trading horizon JB Hunt is expected to generate 13.38 times less return on investment than CVS Health. But when comparing it to its historical volatility, JB Hunt Transport is 1.11 times less risky than CVS Health. It trades about 0.03 of its potential returns per unit of risk. CVS Health Corp is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 4,396 in CVS Health Corp on October 22, 2024 and sell it today you would earn a total of 817.00 from holding CVS Health Corp or generate 18.59% 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. CVS Health Corp
Performance |
| Timeline |
| JB Hunt Transport |
| CVS Health Corp |
JB Hunt and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JB Hunt and CVS Health
The main advantage of trading using opposite JB Hunt and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hunt position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| JB Hunt vs. Compal Electronics GDR | JB Hunt vs. Public Storage | JB Hunt vs. Bloomsbury Publishing Plc | JB Hunt vs. Fidelity National Information |
| CVS Health vs. Invesco Physical Silver | CVS Health vs. Anglo Asian Mining | CVS Health vs. Virgin Wines UK | CVS Health vs. Take Two Interactive Software |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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