Correlation Between JB Hunt and XLMedia PLC

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

Diversification Opportunities for JB Hunt and XLMedia PLC

0.8

Correlation Coefficient

JB Hunt  XLMedia PLC

Very poor diversification

The 3 months correlation between 0J71 and XLMedia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of JB Hunt i.e., JB Hunt and XLMedia PLC go up and down completely randomly.

Pair Corralation between JB Hunt and XLMedia PLC

Assuming the 90 days trading horizon JB Hunt Transport is expected to generate 0.35 times more return on investment than XLMedia PLC. However, JB Hunt Transport is 2.86 times less risky than XLMedia PLC. It trades about 0.01 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.0 per unit of risk. If you would invest  16,992  in JB Hunt Transport on October 1, 2024 and sell it today you would earn a total of  102.00  from holding JB Hunt Transport or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

JB Hunt Transport  vs.  XLMedia PLC

JB Hunt Transport

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JB Hunt and XLMedia PLC

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

The idea behind JB Hunt Transport and XLMedia PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.