Correlation Between JB Hunt and Tres Tentos

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

Diversification Opportunities for JB Hunt and Tres Tentos

0.9

Correlation Coefficient

JB Hunt  Tres Tentos

Almost no diversification

The 3 months correlation between J1BH34 and Tres is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Tres Tentos Agroindustrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tres Tentos Agroindu 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 Tres Tentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tres Tentos Agroindu has no effect on the direction of JB Hunt i.e., JB Hunt and Tres Tentos go up and down completely randomly.

Pair Corralation between JB Hunt and Tres Tentos

Assuming the 90 days trading horizon JB Hunt is expected to generate 162.29 times less return on investment than Tres Tentos. But when comparing it to its historical volatility, JB Hunt Transport is 135.81 times less risky than Tres Tentos. It trades about 0.13 of its potential returns per unit of risk. Tres Tentos Agroindustrial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,118  in Tres Tentos Agroindustrial on October 25, 2024 and sell it today you would earn a total of  343.00  from holding Tres Tentos Agroindustrial or generate 30.68% return on investment over 90 days.

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

JB Hunt Transport  vs.  Tres Tentos Agroindustrial

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.

Tres Tentos Agroindu

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tres Tentos Agroindustrial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tres Tentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JB Hunt and Tres Tentos

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

The idea behind JB Hunt Transport and Tres Tentos Agroindustrial 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.