Correlation Between JB Hunt and American Homes

Can any of the company-specific risk be diversified away by investing in both JB Hunt and American Homes 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 JB Hunt and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JB Hunt Transport and American Homes 4, you can compare the effects of market volatilities on JB Hunt and American Homes 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 JB Hunt with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and American Homes.

Diversification Opportunities for JB Hunt and American Homes

-0.22

Correlation Coefficient

JB Hunt  American Homes

Very good diversification

The 3 months correlation between 0J71 and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and JB Hunt 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 JB Hunt Transport are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of JB Hunt i.e., JB Hunt and American Homes go up and down completely randomly.

Pair Corralation between JB Hunt and American Homes

Assuming the 90 days trading horizon JB Hunt Transport is expected to under-perform the American Homes. In addition to that, JB Hunt is 1.22 times more volatile than American Homes 4. It trades about -0.18 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.01 per unit of volatility. If you would invest  3,705  in American Homes 4 on October 6, 2024 and sell it today you would earn a total of  2.00  from holding American Homes 4 or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

JB Hunt Transport  vs.  American Homes 4

JB Hunt Transport

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JB Hunt is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

American Homes 4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Homes is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JB Hunt and American Homes

The main advantage of trading using opposite JB Hunt and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hunt position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.

The idea behind JB Hunt Transport and American Homes 4 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.