Correlation Between JB Hunt and Ryder System

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

Diversification Opportunities for JB Hunt and Ryder System

-0.34

Correlation Coefficient

JB Hunt  Ryder System

Very good diversification

The 3 months correlation between JBHT and Ryder is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding JB Hunt Transport and Ryder System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryder System 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 Ryder System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryder System has no effect on the direction of JB Hunt i.e., JB Hunt and Ryder System go up and down completely randomly.

Pair Corralation between JB Hunt and Ryder System

Given the investment horizon of 90 days JB Hunt Transport is expected to under-perform the Ryder System. But the stock apears to be less risky and, when comparing its historical volatility, JB Hunt Transport is 1.51 times less risky than Ryder System. The stock trades about -0.4 of its potential returns per unit of risk. The Ryder System is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,956  in Ryder System on February 3, 2024 and sell it today you would earn a total of  515.00  from holding Ryder System or generate 4.31% return on investment over 90 days.

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

JB Hunt Transport  vs.  Ryder System

JB Hunt Transport

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ryder System

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ryder System are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Ryder System may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with JB Hunt and Ryder System

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

The idea behind JB Hunt Transport and Ryder System 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.