Correlation Between JB Hunt and JD Sports

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

Diversification Opportunities for JB Hunt and JD Sports

0.76

Correlation Coefficient

JB Hunt  JD Sports

Poor diversification

The 3 months correlation between 0J71 and JD Sports is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of JB Hunt i.e., JB Hunt and JD Sports go up and down completely randomly.

Pair Corralation between JB Hunt and JD Sports

Assuming the 90 days trading horizon JB Hunt Transport is expected to generate 0.68 times more return on investment than JD Sports. However, JB Hunt Transport is 1.46 times less risky than JD Sports. It trades about -0.12 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.15 per unit of risk. If you would invest  16,968  in JB Hunt Transport on December 30, 2024 and sell it today you would lose (2,222) from holding JB Hunt Transport or give up 13.1% of portfolio value over 90 days.

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

JB Hunt Transport  vs.  JD Sports Fashion

JB Hunt Transport

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with JB Hunt and JD Sports

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

The idea behind JB Hunt Transport and JD Sports Fashion 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.