Correlation Between Tungsten West and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Tungsten West 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 Tungsten West and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tungsten West PLC and JB Hunt Transport, you can compare the effects of market volatilities on Tungsten West 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 Tungsten West with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tungsten West and JB Hunt.
Diversification Opportunities for Tungsten West and JB Hunt
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tungsten and 0J71 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tungsten West 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 Tungsten West 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 Tungsten West 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 Tungsten West i.e., Tungsten West and JB Hunt go up and down completely randomly.
Pair Corralation between Tungsten West and JB Hunt
Assuming the 90 days trading horizon Tungsten West PLC is expected to generate 5.01 times more return on investment than JB Hunt. However, Tungsten West is 5.01 times more volatile than JB Hunt Transport. It trades about 0.03 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.03 per unit of risk. If you would invest 350.00 in Tungsten West PLC on September 2, 2024 and sell it today you would lose (50.00) from holding Tungsten West PLC or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.08% |
| Values | Daily Returns |
Tungsten West PLC vs. JB Hunt Transport
Performance |
| Timeline |
| Tungsten West PLC |
| JB Hunt Transport |
Tungsten West and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tungsten West and JB Hunt
The main advantage of trading using opposite Tungsten West and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tungsten West 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.| Tungsten West vs. Verizon Communications | Tungsten West vs. Fortune Brands Home | Tungsten West vs. Infrastrutture Wireless Italiane | Tungsten West vs. Home Depot |
| JB Hunt vs. Uniper SE | JB Hunt vs. Mulberry Group PLC | JB Hunt vs. London Security Plc | JB Hunt vs. Triad Group PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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