Correlation Between JB Hunt and Home Depot
Can any of the company-specific risk be diversified away by investing in both JB Hunt and Home Depot 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 Home Depot 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 Home Depot, you can compare the effects of market volatilities on JB Hunt and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and Home Depot.
Diversification Opportunities for JB Hunt and Home Depot
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0J71 and Home is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of JB Hunt i.e., JB Hunt and Home Depot go up and down completely randomly.
Pair Corralation between JB Hunt and Home Depot
Assuming the 90 days trading horizon JB Hunt Transport is expected to generate 8.2 times more return on investment than Home Depot. However, JB Hunt is 8.2 times more volatile than Home Depot. It trades about 0.01 of its potential returns per unit of risk. Home Depot is currently generating about 0.09 per unit of risk. If you would invest 18,013 in JB Hunt Transport on September 3, 2024 and sell it today you would earn a total of 897.00 from holding JB Hunt Transport or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.33% |
| Values | Daily Returns |
JB Hunt Transport vs. Home Depot
Performance |
| Timeline |
| JB Hunt Transport |
| Home Depot |
JB Hunt and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JB Hunt and Home Depot
The main advantage of trading using opposite JB Hunt and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hunt position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| JB Hunt vs. Taylor Maritime Investments | JB Hunt vs. Livermore Investments Group | JB Hunt vs. Austevoll Seafood ASA | JB Hunt vs. Bankers Investment Trust |
| Home Depot vs. Rockfire Resources plc | Home Depot vs. Tlou Energy | Home Depot vs. Falcon Oil Gas | Home Depot vs. Helium One Global |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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