Correlation Between Waste Management and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and JB Hunt Transport, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and JB Hunt.
Diversification Opportunities for Waste Management and JB Hunt
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waste and 0J71 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management 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 Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and JB Hunt go up and down completely randomly.
Pair Corralation between Waste Management and JB Hunt
Assuming the 90 days trading horizon Waste Management is expected to generate 0.64 times more return on investment than JB Hunt. However, Waste Management is 1.57 times less risky than JB Hunt. It trades about 0.41 of its potential returns per unit of risk. JB Hunt Transport is currently generating about -0.05 per unit of risk. If you would invest 20,133 in Waste Management on November 5, 2024 and sell it today you would earn a total of 1,998 from holding Waste Management or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. JB Hunt Transport
Performance |
| Timeline |
| Waste Management |
| JB Hunt Transport |
Waste Management and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and JB Hunt
The main advantage of trading using opposite Waste Management and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. Ecclesiastical Insurance Office | Waste Management vs. Tyson Foods Cl | Waste Management vs. Bell Food Group | Waste Management vs. Logitech International SA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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