Correlation Between Bank of America and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and JB Hunt Transport, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JB Hunt.
Diversification Opportunities for Bank of America and JB Hunt
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and J1BH34 is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and JB Hunt go up and down completely randomly.
Pair Corralation between Bank of America and JB Hunt
Assuming the 90 days trading horizon Bank of America is expected to generate 67.15 times more return on investment than JB Hunt. However, Bank of America is 67.15 times more volatile than JB Hunt Transport. It trades about 0.19 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.13 per unit of risk. If you would invest 5,832 in Bank of America on October 14, 2024 and sell it today you would earn a total of 1,071 from holding Bank of America or generate 18.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. JB Hunt Transport
Performance |
| Timeline |
| Bank of America |
| JB Hunt Transport |
Bank of America and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and JB Hunt
The main advantage of trading using opposite Bank of America and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Check Point Software | Bank of America vs. United Natural Foods, | Bank of America vs. Marfrig Global Foods | Bank of America vs. Pure Storage, |
| JB Hunt vs. Synchrony Financial | JB Hunt vs. ICICI Bank Limited | JB Hunt vs. Ameriprise Financial | JB Hunt vs. Bank of America |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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