Correlation Between American Airlines and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both American Airlines and JetBlue Airways 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 American Airlines and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and JetBlue Airways Corp, you can compare the effects of market volatilities on American Airlines and JetBlue Airways 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 American Airlines with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and JetBlue Airways.
Diversification Opportunities for American Airlines and JetBlue Airways
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and JetBlue is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and JetBlue Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetBlue Airways Corp and American Airlines 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 American Airlines Group are associated (or correlated) with JetBlue Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JetBlue Airways Corp has no effect on the direction of American Airlines i.e., American Airlines and JetBlue Airways go up and down completely randomly.
Pair Corralation between American Airlines and JetBlue Airways
Considering the 90-day investment horizon American Airlines is expected to generate 2.83 times less return on investment than JetBlue Airways. But when comparing it to its historical volatility, American Airlines Group is 1.7 times less risky than JetBlue Airways. It trades about 0.03 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 463.00 in JetBlue Airways Corp on August 27, 2024 and sell it today you would earn a total of 146.00 from holding JetBlue Airways Corp or generate 31.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. JetBlue Airways Corp
Performance |
| Timeline |
| American Airlines |
| JetBlue Airways Corp |
American Airlines and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and JetBlue Airways
The main advantage of trading using opposite American Airlines and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, JetBlue Airways 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 JetBlue Airways will offset losses from the drop in JetBlue Airways' long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
| JetBlue Airways vs. Frontier Group Holdings | JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. American Airlines Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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