Correlation Between Hub and JB Hunt

Can any of the company-specific risk be diversified away by investing in both Hub and JB Hunt 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 Hub and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hub Group and JB Hunt Transport, you can compare the effects of market volatilities on Hub and JB Hunt 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 Hub with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub and JB Hunt.

Diversification Opportunities for Hub and JB Hunt

0.92

Correlation Coefficient

Hub  JB Hunt

Almost no diversification

The 3 months correlation between Hub and JBHT is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group and JB Hunt Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hunt Transport and Hub 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 Hub Group are associated (or correlated) with JB Hunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hunt Transport has no effect on the direction of Hub i.e., Hub and JB Hunt go up and down completely randomly.

Pair Corralation between Hub and JB Hunt

Given the investment horizon of 90 days Hub Group is expected to under-perform the JB Hunt. But the stock apears to be less risky and, when comparing its historical volatility, Hub Group is 1.1 times less risky than JB Hunt. The stock trades about -0.14 of its potential returns per unit of risk. The JB Hunt Transport is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  17,156  in JB Hunt Transport on December 27, 2024 and sell it today you would lose (2,017) from holding JB Hunt Transport or give up 11.76% of portfolio value over 90 days.

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

Hub Group  vs.  JB Hunt Transport

Hub Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hub Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hub and JB Hunt

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

The idea behind Hub Group and JB Hunt Transport 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 Transaction History module to view history of all your transactions and understand their impact on performance.