Correlation Between Cebu Air and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Cebu Air 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 Cebu Air and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air ADR and JetBlue Airways Corp, you can compare the effects of market volatilities on Cebu Air 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 Cebu Air with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and JetBlue Airways.
Diversification Opportunities for Cebu Air and JetBlue Airways
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cebu and JetBlue is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR 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 Cebu Air 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 Cebu Air ADR 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 Cebu Air i.e., Cebu Air and JetBlue Airways go up and down completely randomly.
Pair Corralation between Cebu Air and JetBlue Airways
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the JetBlue Airways. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cebu Air ADR is 1.17 times less risky than JetBlue Airways. The pink sheet trades about -0.02 of its potential returns per unit of risk. The JetBlue Airways Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 710.00 in JetBlue Airways Corp on September 3, 2024 and sell it today you would lose (91.00) from holding JetBlue Airways Corp or give up 12.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cebu Air ADR vs. JetBlue Airways Corp
Performance |
| Timeline |
| Cebu Air ADR |
| JetBlue Airways Corp |
Cebu Air and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and JetBlue Airways
The main advantage of trading using opposite Cebu Air and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air 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.| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
| JetBlue Airways vs. Copa Holdings SA | JetBlue Airways vs. SkyWest | JetBlue Airways vs. Air Transport Services | JetBlue Airways vs. Mesa Air 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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