Correlation Between JB Hunt and Apartment Investment

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

Diversification Opportunities for JB Hunt and Apartment Investment

0.74

Correlation Coefficient

JB Hunt  Apartment Investment

Poor diversification

The 3 months correlation between J1BH34 and Apartment is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and 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 Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of JB Hunt i.e., JB Hunt and Apartment Investment go up and down completely randomly.

Pair Corralation between JB Hunt and Apartment Investment

Assuming the 90 days trading horizon JB Hunt is expected to generate 110.87 times less return on investment than Apartment Investment. But when comparing it to its historical volatility, JB Hunt Transport is 89.42 times less risky than Apartment Investment. It trades about 0.13 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,650  in Apartment Investment and on October 8, 2024 and sell it today you would earn a total of  936.00  from holding Apartment Investment and or generate 20.13% return on investment over 90 days.

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

JB Hunt Transport  vs.  Apartment Investment and

JB Hunt Transport

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, JB Hunt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Apartment Investment and

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Apartment Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JB Hunt and Apartment Investment

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

The idea behind JB Hunt Transport and Apartment Investment and 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.