Correlation Between JB Hunt and Sovereign Metals

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

Diversification Opportunities for JB Hunt and Sovereign Metals

0.63

Correlation Coefficient

JB Hunt  Sovereign Metals

Poor diversification

The 3 months correlation between 0J71 and Sovereign is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Sovereign Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals 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 Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of JB Hunt i.e., JB Hunt and Sovereign Metals go up and down completely randomly.

Pair Corralation between JB Hunt and Sovereign Metals

Assuming the 90 days trading horizon JB Hunt Transport is expected to generate 0.78 times more return on investment than Sovereign Metals. However, JB Hunt Transport is 1.28 times less risky than Sovereign Metals. It trades about 0.0 of its potential returns per unit of risk. Sovereign Metals is currently generating about 0.0 per unit of risk. If you would invest  16,958  in JB Hunt Transport on September 21, 2024 and sell it today you would lose (126.00) from holding JB Hunt Transport or give up 0.74% 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.  Sovereign Metals

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.

Sovereign Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sovereign Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sovereign Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JB Hunt and Sovereign Metals

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

The idea behind JB Hunt Transport and Sovereign Metals 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.