Correlation Between Delta Air and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Delta 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 Delta 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 Delta Air Lines and JetBlue Airways Corp, you can compare the effects of market volatilities on Delta 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 Delta Air with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and JetBlue Airways.
Diversification Opportunities for Delta Air and JetBlue Airways
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and JetBlue is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines 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 Delta 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 Delta Air Lines 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 Delta Air i.e., Delta Air and JetBlue Airways go up and down completely randomly.
Pair Corralation between Delta Air and JetBlue Airways
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.43 times more return on investment than JetBlue Airways. However, Delta Air Lines is 2.32 times less risky than JetBlue Airways. It trades about 0.28 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about -0.12 per unit of risk. If you would invest 5,480 in Delta Air Lines on August 23, 2024 and sell it today you would earn a total of 854.50 from holding Delta Air Lines or generate 15.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. JetBlue Airways Corp
Performance |
| Timeline |
| Delta Air Lines |
| JetBlue Airways Corp |
Delta Air and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and JetBlue Airways
The main advantage of trading using opposite Delta Air and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta 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.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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