Correlation Between JB Hunt and Abingdon Health

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

Diversification Opportunities for JB Hunt and Abingdon Health

-0.54

Correlation Coefficient

JB Hunt  Abingdon Health

Excellent diversification

The 3 months correlation between 0J71 and Abingdon is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc 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 Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of JB Hunt i.e., JB Hunt and Abingdon Health go up and down completely randomly.

Pair Corralation between JB Hunt and Abingdon Health

Assuming the 90 days trading horizon JB Hunt Transport is expected to under-perform the Abingdon Health. But the stock apears to be less risky and, when comparing its historical volatility, JB Hunt Transport is 1.88 times less risky than Abingdon Health. The stock trades about -0.17 of its potential returns per unit of risk. The Abingdon Health Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  775.00  in Abingdon Health Plc on October 11, 2024 and sell it today you would earn a total of  25.00  from holding Abingdon Health Plc or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

JB Hunt Transport  vs.  Abingdon Health Plc

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.

Abingdon Health Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abingdon Health Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with JB Hunt and Abingdon Health

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

The idea behind JB Hunt Transport and Abingdon Health Plc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.