Correlation Between Universal Music and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Universal Music 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 Universal Music and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and JB Hunt Transport, you can compare the effects of market volatilities on Universal Music 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 Universal Music with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and JB Hunt.
Diversification Opportunities for Universal Music and JB Hunt
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and 0J71 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group 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 Universal Music 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 Universal Music Group 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 Universal Music i.e., Universal Music and JB Hunt go up and down completely randomly.
Pair Corralation between Universal Music and JB Hunt
Assuming the 90 days trading horizon Universal Music Group is expected to generate 1.46 times more return on investment than JB Hunt. However, Universal Music is 1.46 times more volatile than JB Hunt Transport. It trades about 0.0 of its potential returns per unit of risk. JB Hunt Transport is currently generating about -0.04 per unit of risk. If you would invest 2,674 in Universal Music Group on October 22, 2024 and sell it today you would lose (196.00) from holding Universal Music Group or give up 7.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.13% |
| Values | Daily Returns |
Universal Music Group vs. JB Hunt Transport
Performance |
| Timeline |
| Universal Music Group |
| JB Hunt Transport |
Universal Music and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and JB Hunt
The main advantage of trading using opposite Universal Music and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music 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.| Universal Music vs. Sabre Insurance Group | Universal Music vs. Pets at Home | Universal Music vs. Gaztransport et Technigaz | Universal Music vs. Beazer Homes USA |
| JB Hunt vs. Compal Electronics GDR | JB Hunt vs. Public Storage | JB Hunt vs. Bloomsbury Publishing Plc | JB Hunt vs. Fidelity National Information |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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