Correlation Between Home Depot and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Home Depot 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 Home Depot and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and JB Hunt Transport, you can compare the effects of market volatilities on Home Depot 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 Home Depot with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and JB Hunt.
Diversification Opportunities for Home Depot and JB Hunt
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Home and 0J71 is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot 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 Home Depot 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 Home Depot 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 Home Depot i.e., Home Depot and JB Hunt go up and down completely randomly.
Pair Corralation between Home Depot and JB Hunt
Assuming the 90 days trading horizon Home Depot is expected to generate 1.36 times less return on investment than JB Hunt. But when comparing it to its historical volatility, Home Depot is 8.2 times less risky than JB Hunt. It trades about 0.09 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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 |
Home Depot vs. JB Hunt Transport
Performance |
| Timeline |
| Home Depot |
| JB Hunt Transport |
Home Depot and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and JB Hunt
The main advantage of trading using opposite Home Depot and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot 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.| Home Depot vs. Rockfire Resources plc | Home Depot vs. Tlou Energy | Home Depot vs. Falcon Oil Gas | Home Depot vs. Helium One Global |
| JB Hunt vs. Taylor Maritime Investments | JB Hunt vs. Livermore Investments Group | JB Hunt vs. Austevoll Seafood ASA | JB Hunt vs. Bankers Investment Trust |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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