Correlation Between GM and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and JetBlue Airways, you can compare the effects of market volatilities on GM 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 GM with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and JetBlue Airways.
Diversification Opportunities for GM and JetBlue Airways
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and JetBlue is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and JetBlue Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetBlue Airways and GM 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 General Motors 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 has no effect on the direction of GM i.e., GM and JetBlue Airways go up and down completely randomly.
Pair Corralation between GM and JetBlue Airways
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.53 times more return on investment than JetBlue Airways. However, General Motors is 1.88 times less risky than JetBlue Airways. It trades about 0.05 of its potential returns per unit of risk. JetBlue Airways is currently generating about 0.01 per unit of risk. If you would invest 3,807 in General Motors on August 24, 2024 and sell it today you would earn a total of 2,046 from holding General Motors or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. JetBlue Airways
Performance |
| Timeline |
| General Motors |
| JetBlue Airways |
GM and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and JetBlue Airways
The main advantage of trading using opposite GM and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and JetBlue Airways 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. United Airlines Holdings | JetBlue Airways vs. Applied Materials | JetBlue Airways vs. Southern Copper | JetBlue Airways vs. Cognizant Technology Solutions |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |