Correlation Between JB Hunt and Aberdeen Diversified

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

Diversification Opportunities for JB Hunt and Aberdeen Diversified

-0.21

Correlation Coefficient

JB Hunt  Aberdeen Diversified

Very good diversification

The 3 months correlation between 0J71 and Aberdeen is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified 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 Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of JB Hunt i.e., JB Hunt and Aberdeen Diversified go up and down completely randomly.

Pair Corralation between JB Hunt and Aberdeen Diversified

Assuming the 90 days trading horizon JB Hunt is expected to generate 2.65 times less return on investment than Aberdeen Diversified. In addition to that, JB Hunt is 1.8 times more volatile than Aberdeen Diversified Income. It trades about 0.06 of its total potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.3 per unit of volatility. If you would invest  4,300  in Aberdeen Diversified Income on October 20, 2024 and sell it today you would earn a total of  290.00  from holding Aberdeen Diversified Income or generate 6.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

JB Hunt Transport  vs.  Aberdeen Diversified Income

JB Hunt Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JB Hunt Transport has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Aberdeen Diversified

Risk-Adjusted Performance

6 of 100

Insignificant

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

Pair Trading with JB Hunt and Aberdeen Diversified

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

The idea behind JB Hunt Transport and Aberdeen Diversified Income 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 Transaction History module to view history of all your transactions and understand their impact on performance.