Correlation Between Commonwealth Bank and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank 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 Commonwealth Bank and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and JetBlue Airways Corp, you can compare the effects of market volatilities on Commonwealth Bank 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 Commonwealth Bank with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and JetBlue Airways.
Diversification Opportunities for Commonwealth Bank and JetBlue Airways
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and JetBlue is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of 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 Commonwealth Bank 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 Commonwealth Bank of 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 Commonwealth Bank i.e., Commonwealth Bank and JetBlue Airways go up and down completely randomly.
Pair Corralation between Commonwealth Bank and JetBlue Airways
Assuming the 90 days horizon Commonwealth Bank is expected to generate 3.82 times less return on investment than JetBlue Airways. But when comparing it to its historical volatility, Commonwealth Bank of is 3.59 times less risky than JetBlue Airways. It trades about 0.08 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 592.00 in JetBlue Airways Corp on September 12, 2024 and sell it today you would earn a total of 123.00 from holding JetBlue Airways Corp or generate 20.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Commonwealth Bank of vs. JetBlue Airways Corp
Performance |
| Timeline |
| Commonwealth Bank |
| JetBlue Airways Corp |
Commonwealth Bank and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and JetBlue Airways
The main advantage of trading using opposite Commonwealth Bank and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank 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.| Commonwealth Bank vs. Svenska Handelsbanken PK | Commonwealth Bank vs. ANZ Group Holdings | Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. National Australia Bank |
| JetBlue Airways vs. American Airlines Group | JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. Frontier Group Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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