Correlation Between JB Hunt and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both JB Hunt and MercadoLibre 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 MercadoLibre 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 MercadoLibre, you can compare the effects of market volatilities on JB Hunt and MercadoLibre 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 MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of JB Hunt and MercadoLibre.
Diversification Opportunities for JB Hunt and MercadoLibre
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between J1BH34 and MercadoLibre is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre 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 MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of JB Hunt i.e., JB Hunt and MercadoLibre go up and down completely randomly.
Pair Corralation between JB Hunt and MercadoLibre
Assuming the 90 days trading horizon JB Hunt is expected to generate 8.21 times less return on investment than MercadoLibre. But when comparing it to its historical volatility, JB Hunt Transport is 1.72 times less risky than MercadoLibre. It trades about 0.01 of its potential returns per unit of risk. MercadoLibre is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,307 in MercadoLibre on October 24, 2024 and sell it today you would earn a total of 1,940 from holding MercadoLibre or generate 26.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.8% |
Values | Daily Returns |
JB Hunt Transport vs. MercadoLibre
Performance |
Timeline |
JB Hunt Transport |
MercadoLibre |
JB Hunt and MercadoLibre Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JB Hunt and MercadoLibre
The main advantage of trading using opposite JB Hunt and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JB Hunt position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.JB Hunt vs. Taiwan Semiconductor Manufacturing | JB Hunt vs. Apple Inc | JB Hunt vs. Alibaba Group Holding | JB Hunt vs. Microsoft |
MercadoLibre vs. GX AI TECH | MercadoLibre vs. Take Two Interactive Software | MercadoLibre vs. Roper Technologies, | MercadoLibre vs. The Hartford Financial |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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