Correlation Between METISA Metalrgica and JB Hunt

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

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

Diversification Opportunities for METISA Metalrgica and JB Hunt

0.11

Correlation Coefficient

METISA Metalrgica  JB Hunt

Average diversification

The 3 months correlation between METISA and J1BH34 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense 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 METISA Metalrgica 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 METISA Metalrgica Timboense 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 METISA Metalrgica i.e., METISA Metalrgica and JB Hunt go up and down completely randomly.

Pair Corralation between METISA Metalrgica and JB Hunt

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the JB Hunt. In addition to that, METISA Metalrgica is 2.17 times more volatile than JB Hunt Transport. It trades about 0.0 of its total potential returns per unit of risk. JB Hunt Transport is currently generating about 0.01 per unit of volatility. If you would invest  2,699  in JB Hunt Transport on October 23, 2024 and sell it today you would earn a total of  93.00  from holding JB Hunt Transport or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.74%
Values	Daily Returns

METISA Metalrgica Timboense  vs.  JB Hunt Transport

METISA Metalrgica

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with METISA Metalrgica and JB Hunt

The main advantage of trading using opposite METISA Metalrgica and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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 METISA Metalrgica Timboense 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.