Correlation Between Ford and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and JetBlue Airways Corp, you can compare the effects of market volatilities on Ford 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 Ford with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and JetBlue Airways.
Diversification Opportunities for Ford and JetBlue Airways
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and JetBlue is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and JetBlue Airways go up and down completely randomly.
Pair Corralation between Ford and JetBlue Airways
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.49 times more return on investment than JetBlue Airways. However, Ford Motor is 2.05 times less risky than JetBlue Airways. It trades about 0.19 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.0 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. JetBlue Airways Corp
Performance |
| Timeline |
| Ford Motor |
| JetBlue Airways Corp |
Ford and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and JetBlue Airways
The main advantage of trading using opposite Ford and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and JetBlue Airways Corp 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.| JetBlue Airways vs. American Airlines Group | JetBlue Airways vs. Southwest Airlines | 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |