Correlation Between Royal Mail and JB Hunt

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

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

Diversification Opportunities for Royal Mail and JB Hunt

0.0

Correlation Coefficient

Royal Mail  JB Hunt

Pay attention - limited upside

The 3 months correlation between Royal and JBHT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Royal Mail Plc 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 Royal Mail 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 Royal Mail Plc 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 Royal Mail i.e., Royal Mail and JB Hunt go up and down completely randomly.

Pair Corralation between Royal Mail and JB Hunt

If you would invest (100.00) in Royal Mail Plc on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Royal Mail Plc or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Royal Mail Plc  vs.  JB Hunt Transport

Royal Mail Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royal Mail Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Royal Mail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JB Hunt Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days JB Hunt Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Royal Mail and JB Hunt

The main advantage of trading using opposite Royal Mail and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Mail 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 Royal Mail Plc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.