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
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Royal and JBHT is -0.75. 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 under-perform the JB Hunt. But the pink sheet apears to be less risky and, when comparing its historical volatility, Royal Mail PLC is 4.92 times less risky than JB Hunt. The pink sheet trades about -0.34 of its potential returns per unit of risk. The JB Hunt Transport is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17,505 in JB Hunt Transport on August 24, 2024 and sell it today you would earn a total of 652.00 from holding JB Hunt Transport or generate 3.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.65% |
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. Kuehne Nagel International | Royal Mail vs. Kuehne Nagel International | Royal Mail vs. DSV Panalpina AS | Royal Mail vs. DSV Panalpina AS |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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