Correlation Between JB Hunt and RTW Venture

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

Diversification Opportunities for JB Hunt and RTW Venture

-0.31

Correlation Coefficient

JB Hunt  RTW Venture

Very good diversification

The 3 months correlation between 0J71 and RTW is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and RTW Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTW Venture Fund 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 RTW Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTW Venture Fund has no effect on the direction of JB Hunt i.e., JB Hunt and RTW Venture go up and down completely randomly.

Pair Corralation between JB Hunt and RTW Venture

Assuming the 90 days trading horizon JB Hunt Transport is expected to generate 1.77 times more return on investment than RTW Venture. However, JB Hunt is 1.77 times more volatile than RTW Venture Fund. It trades about 0.09 of its potential returns per unit of risk. RTW Venture Fund is currently generating about -0.11 per unit of risk. If you would invest  16,806  in JB Hunt Transport on September 14, 2024 and sell it today you would earn a total of  1,493  from holding JB Hunt Transport or generate 8.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

JB Hunt Transport  vs.  RTW Venture Fund

JB Hunt Transport

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JB Hunt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RTW Venture Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RTW Venture 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 RTW Venture

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

The idea behind JB Hunt Transport and RTW Venture Fund 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..