Correlation Between JB Hunt and Cincinnati Financial

Can any of the company-specific risk be diversified away by investing in both JB Hunt and Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial Corp, you can compare the effects of market volatilities on JB Hunt and Cincinnati Financial 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 Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and Cincinnati Financial.

Diversification Opportunities for JB Hunt and Cincinnati Financial

0.68

Correlation Coefficient

JB Hunt  Cincinnati Financial

Poor diversification

The 3 months correlation between 0J71 and Cincinnati is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp 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 Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of JB Hunt i.e., JB Hunt and Cincinnati Financial go up and down completely randomly.

Pair Corralation between JB Hunt and Cincinnati Financial

Assuming the 90 days trading horizon JB Hunt Transport is expected to under-perform the Cincinnati Financial. In addition to that, JB Hunt is 1.21 times more volatile than Cincinnati Financial Corp. It trades about -0.01 of its total potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.1 per unit of volatility. If you would invest  10,067  in Cincinnati Financial Corp on October 5, 2024 and sell it today you would earn a total of  4,250  from holding Cincinnati Financial Corp or generate 42.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

JB Hunt Transport  vs.  Cincinnati Financial Corp

JB Hunt Transport

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 3 (%) 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.

Cincinnati Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JB Hunt and Cincinnati Financial

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

The idea behind JB Hunt Transport and Cincinnati Financial Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.