Correlation Between Target and JB Hunt

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

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

Diversification Opportunities for Target and JB Hunt

-0.81

Correlation Coefficient

Target  JB Hunt

Pay attention - limited upside

The 3 months correlation between Target and J1BH34 is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Target 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 Target 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 Target 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 Target i.e., Target and JB Hunt go up and down completely randomly.

Pair Corralation between Target and JB Hunt

Assuming the 90 days trading horizon Target is expected to under-perform the JB Hunt. In addition to that, Target is 4.83 times more volatile than JB Hunt Transport. It trades about -0.23 of its total potential returns per unit of risk. JB Hunt Transport is currently generating about 0.14 per unit of volatility. If you would invest  2,787  in JB Hunt Transport on December 23, 2024 and sell it today you would earn a total of  98.00  from holding JB Hunt Transport or generate 3.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Target  vs.  JB Hunt Transport

Target

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JB Hunt Transport

Risk-Adjusted Performance

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 Target and JB Hunt

The main advantage of trading using opposite Target and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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 Target 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.