Correlation Between Discover Financial and JB Hunt

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Discover Financial 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 Discover Financial and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discover Financial Services and JB Hunt Transport, you can compare the effects of market volatilities on Discover Financial 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 Discover Financial with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and JB Hunt.

Diversification Opportunities for Discover Financial and JB Hunt

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Discover and J1BH34 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services 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 Discover Financial 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 Discover Financial Services 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 Discover Financial i.e., Discover Financial and JB Hunt go up and down completely randomly.

Pair Corralation between Discover Financial and JB Hunt

If you would invest  41,833  in Discover Financial Services on October 14, 2024 and sell it today you would earn a total of  10,107  from holding Discover Financial Services or generate 24.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Discover Financial Services  vs.  JB Hunt Transport

 Performance 
       Timeline  
Discover Financial 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Discover Financial Services are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Discover Financial sustained solid returns over the last few months and may actually be approaching a breakup point.
JB Hunt Transport 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, JB Hunt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Discover Financial and JB Hunt Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Discover Financial and JB Hunt

The main advantage of trading using opposite Discover Financial and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial 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.
The idea behind Discover Financial Services and JB Hunt Transport pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Share Portfolio
Track or share privately all of your investments from the convenience of any device