Correlation Between Alliance Data and JB Hunt

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

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

Diversification Opportunities for Alliance Data and JB Hunt

0.86

Correlation Coefficient

Alliance Data  JB Hunt

Very poor diversification

The 3 months correlation between Alliance and 0J71 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems 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 Alliance Data 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 Alliance Data Systems 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 Alliance Data i.e., Alliance Data and JB Hunt go up and down completely randomly.

Pair Corralation between Alliance Data and JB Hunt

Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 1.26 times more return on investment than JB Hunt. However, Alliance Data is 1.26 times more volatile than JB Hunt Transport. It trades about 0.22 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.14 per unit of risk. If you would invest  4,835  in Alliance Data Systems on April 25, 2025 and sell it today you would earn a total of  1,509  from holding Alliance Data Systems or generate 31.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	85.71%
Values	Daily Returns

Alliance Data Systems  vs.  JB Hunt Transport

Alliance Data Systems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Data Systems are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alliance Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

JB Hunt Transport

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JB Hunt Transport are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, JB Hunt unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliance Data and JB Hunt

The main advantage of trading using opposite Alliance Data and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data 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 Alliance Data Systems 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 CEOs Directory module to screen CEOs from public companies around the world.