Correlation Between JB Hunt and Eco Animal

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

Diversification Opportunities for JB Hunt and Eco Animal

0.16

Correlation Coefficient

JB Hunt  Eco Animal

Average diversification

The 3 months correlation between 0J71 and Eco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of JB Hunt i.e., JB Hunt and Eco Animal go up and down completely randomly.

Pair Corralation between JB Hunt and Eco Animal

Assuming the 90 days trading horizon JB Hunt Transport is expected to generate 1.13 times more return on investment than Eco Animal. However, JB Hunt is 1.13 times more volatile than Eco Animal Health. It trades about 0.02 of its potential returns per unit of risk. Eco Animal Health is currently generating about -0.3 per unit of risk. If you would invest  17,077  in JB Hunt Transport on October 26, 2024 and sell it today you would earn a total of  88.00  from holding JB Hunt Transport or generate 0.52% return on investment over 90 days.

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

JB Hunt Transport  vs.  Eco Animal Health

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.

Eco Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eco Animal is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JB Hunt and Eco Animal

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

The idea behind JB Hunt Transport and Eco Animal Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.