Correlation Between JB Hunt and Fertilizantes Heringer

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

Diversification Opportunities for JB Hunt and Fertilizantes Heringer

0.51

Correlation Coefficient

JB Hunt  Fertilizantes Heringer

Very weak diversification

The 3 months correlation between J1BH34 and Fertilizantes is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Fertilizantes Heringer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizantes Heringer 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 Fertilizantes Heringer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizantes Heringer has no effect on the direction of JB Hunt i.e., JB Hunt and Fertilizantes Heringer go up and down completely randomly.

Pair Corralation between JB Hunt and Fertilizantes Heringer

Assuming the 90 days trading horizon JB Hunt is expected to generate 422.81 times less return on investment than Fertilizantes Heringer. But when comparing it to its historical volatility, JB Hunt Transport is 581.22 times less risky than Fertilizantes Heringer. It trades about 0.13 of its potential returns per unit of risk. Fertilizantes Heringer SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  380.00  in Fertilizantes Heringer SA on October 11, 2024 and sell it today you would earn a total of  180.00  from holding Fertilizantes Heringer SA or generate 47.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

JB Hunt Transport  vs.  Fertilizantes Heringer SA

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.

Fertilizantes Heringer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizantes Heringer SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fertilizantes Heringer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JB Hunt and Fertilizantes Heringer

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

The idea behind JB Hunt Transport and Fertilizantes Heringer SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.