Correlation Between Toyota and JB Hunt

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

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

Diversification Opportunities for Toyota and JB Hunt

0.58

Correlation Coefficient

Toyota  JB Hunt

Very weak diversification

The 3 months correlation between Toyota and 0J71 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp 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 Toyota 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 Toyota Motor Corp 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 Toyota i.e., Toyota and JB Hunt go up and down completely randomly.

Pair Corralation between Toyota and JB Hunt

Assuming the 90 days trading horizon Toyota is expected to generate 1.08 times less return on investment than JB Hunt. In addition to that, Toyota is 1.07 times more volatile than JB Hunt Transport. It trades about 0.08 of its total potential returns per unit of risk. JB Hunt Transport is currently generating about 0.09 per unit of volatility. If you would invest  16,827  in JB Hunt Transport on September 12, 2024 and sell it today you would earn a total of  1,463  from holding JB Hunt Transport or generate 8.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Toyota Motor Corp  vs.  JB Hunt Transport

Toyota Motor Corp

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Motor Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Toyota may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JB Hunt Transport

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, JB Hunt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Toyota and JB Hunt

The main advantage of trading using opposite Toyota and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota 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 Toyota Motor Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.