Correlation Between Royal Mail and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Royal Mail 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 Royal Mail and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Mail PLC and JB Hunt Transport, you can compare the effects of market volatilities on Royal Mail 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 Royal Mail with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Mail and JB Hunt.
Diversification Opportunities for Royal Mail and JB Hunt
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Royal and JBHT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Royal Mail PLC 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 Royal Mail 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 Royal Mail PLC 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 Royal Mail i.e., Royal Mail and JB Hunt go up and down completely randomly.
Pair Corralation between Royal Mail and JB Hunt
Assuming the 90 days horizon Royal Mail PLC is expected to generate 0.42 times more return on investment than JB Hunt. However, Royal Mail PLC is 2.37 times less risky than JB Hunt. It trades about 0.07 of its potential returns per unit of risk. JB Hunt Transport is currently generating about -0.14 per unit of risk. If you would invest 871.00 in Royal Mail PLC on October 25, 2024 and sell it today you would earn a total of 18.00 from holding Royal Mail PLC or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Royal Mail PLC vs. JB Hunt Transport
Performance |
| Timeline |
| Royal Mail PLC |
| JB Hunt Transport |
Royal Mail and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Mail and JB Hunt
The main advantage of trading using opposite Royal Mail and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Mail 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.| Royal Mail vs. FedEx | Royal Mail vs. United Parcel Service | Royal Mail vs. Freightos Limited Ordinary | Royal Mail vs. Addentax Group Corp |
| JB Hunt vs. Forward Air | JB Hunt vs. Hub Group | JB Hunt vs. CH Robinson Worldwide | JB Hunt vs. Expeditors International of |
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.
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