Correlation Between Induction Healthcare and JB Hunt

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

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

Diversification Opportunities for Induction Healthcare and JB Hunt

0.46

Correlation Coefficient

Induction Healthcare  JB Hunt

Very weak diversification

The 3 months correlation between Induction and 0J71 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare i.e., Induction Healthcare and JB Hunt go up and down completely randomly.

Pair Corralation between Induction Healthcare and JB Hunt

Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the JB Hunt. But the stock apears to be less risky and, when comparing its historical volatility, Induction Healthcare Group is 1.19 times less risky than JB Hunt. The stock trades about -0.24 of its potential returns per unit of risk. The JB Hunt Transport is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  17,912  in JB Hunt Transport on October 16, 2024 and sell it today you would lose (65.00) from holding JB Hunt Transport or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Induction Healthcare Group  vs.  JB Hunt Transport

Induction Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Induction Healthcare Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Induction Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Induction Healthcare and JB Hunt

The main advantage of trading using opposite Induction Healthcare and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare 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 Induction Healthcare 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 Global Correlations module to find global opportunities by holding instruments from different markets.