Correlation Between Made Tech and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Made Tech 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 Made Tech and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Made Tech Group and JB Hunt Transport, you can compare the effects of market volatilities on Made Tech 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 Made Tech with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Made Tech and JB Hunt.
Diversification Opportunities for Made Tech and JB Hunt
Poor diversification
The 3 months correlation between Made and 0J71 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech 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 Made Tech 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 Made Tech 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 Made Tech i.e., Made Tech and JB Hunt go up and down completely randomly.
Pair Corralation between Made Tech and JB Hunt
Assuming the 90 days trading horizon Made Tech Group is expected to generate 1.94 times more return on investment than JB Hunt. However, Made Tech is 1.94 times more volatile than JB Hunt Transport. It trades about 0.11 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.09 per unit of risk. If you would invest 1,538 in Made Tech Group on September 3, 2024 and sell it today you would earn a total of 762.00 from holding Made Tech Group or generate 49.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Made Tech Group vs. JB Hunt Transport
Performance |
| Timeline |
| Made Tech Group |
| JB Hunt Transport |
Made Tech and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Made Tech and JB Hunt
The main advantage of trading using opposite Made Tech and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Made Tech 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.| Made Tech vs. Samsung Electronics Co | Made Tech vs. Samsung Electronics Co | Made Tech vs. Hyundai Motor | Made Tech vs. Toyota Motor Corp |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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