Correlation Between JB Hunt and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both JB Hunt and Fortune Brands 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 Fortune Brands 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 Fortune Brands Home, you can compare the effects of market volatilities on JB Hunt and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and Fortune Brands.
Diversification Opportunities for JB Hunt and Fortune Brands
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0J71 and Fortune is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of JB Hunt i.e., JB Hunt and Fortune Brands go up and down completely randomly.
Pair Corralation between JB Hunt and Fortune Brands
Assuming the 90 days trading horizon JB Hunt is expected to generate 1.78 times less return on investment than Fortune Brands. But when comparing it to its historical volatility, JB Hunt Transport is 1.23 times less risky than Fortune Brands. It trades about 0.03 of its potential returns per unit of risk. Fortune Brands Home is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,580 in Fortune Brands Home on August 31, 2024 and sell it today you would earn a total of 1,250 from holding Fortune Brands Home or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.83% |
| Values | Daily Returns |
JB Hunt Transport vs. Fortune Brands Home
Performance |
| Timeline |
| JB Hunt Transport |
| Fortune Brands Home |
JB Hunt and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JB Hunt and Fortune Brands
The main advantage of trading using opposite JB Hunt and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hunt position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| JB Hunt vs. Neometals | JB Hunt vs. Coor Service Management | JB Hunt vs. Aeorema Communications Plc | JB Hunt vs. JLEN Environmental Assets |
| Fortune Brands vs. Wheaton Precious Metals | Fortune Brands vs. MTI Wireless Edge | Fortune Brands vs. Jacquet Metal Service | Fortune Brands vs. Capital Metals PLC |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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