Correlation Between JB Hunt and SM Energy
Can any of the company-specific risk be diversified away by investing in both JB Hunt and SM Energy 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 SM Energy 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 SM Energy Co, you can compare the effects of market volatilities on JB Hunt and SM Energy 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 SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and SM Energy.
Diversification Opportunities for JB Hunt and SM Energy
Poor diversification
The 3 months correlation between 0J71 and 0KZA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy 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 SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of JB Hunt i.e., JB Hunt and SM Energy go up and down completely randomly.
Pair Corralation between JB Hunt and SM Energy
Assuming the 90 days trading horizon JB Hunt is expected to generate 2.95 times less return on investment than SM Energy. But when comparing it to its historical volatility, JB Hunt Transport is 1.07 times less risky than SM Energy. It trades about 0.11 of its potential returns per unit of risk. SM Energy Co is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,937 in SM Energy Co on October 17, 2024 and sell it today you would earn a total of 433.00 from holding SM Energy Co or generate 11.0% 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. SM Energy Co
Performance |
| Timeline |
| JB Hunt Transport |
| SM Energy |
JB Hunt and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JB Hunt and SM Energy
The main advantage of trading using opposite JB Hunt and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hunt position performs unexpectedly, SM Energy 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 SM Energy will offset losses from the drop in SM Energy's long position.| JB Hunt vs. Grieg Seafood | JB Hunt vs. CAP LEASE AVIATION | JB Hunt vs. Synchrony Financial | JB Hunt vs. Sydbank |
| SM Energy vs. Ebro Foods | SM Energy vs. Associated British Foods | SM Energy vs. JB Hunt Transport | SM Energy vs. Grieg Seafood |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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