Correlation Between JetBlue Airways and United Airlines
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and United Airlines 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 JetBlue Airways and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JetBlue Airways and United Airlines Holdings, you can compare the effects of market volatilities on JetBlue Airways and United Airlines 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 JetBlue Airways with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and United Airlines.
Diversification Opportunities for JetBlue Airways and United Airlines
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JetBlue and United is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings and JetBlue Airways 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 JetBlue Airways are associated (or correlated) with United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and United Airlines go up and down completely randomly.
Pair Corralation between JetBlue Airways and United Airlines
Assuming the 90 days trading horizon JetBlue Airways is expected to generate 2.11 times less return on investment than United Airlines. In addition to that, JetBlue Airways is 1.55 times more volatile than United Airlines Holdings. It trades about 0.05 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.18 per unit of volatility. If you would invest 70,000 in United Airlines Holdings on November 3, 2024 and sell it today you would earn a total of 152,680 from holding United Airlines Holdings or generate 218.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JetBlue Airways vs. United Airlines Holdings
Performance |
| Timeline |
| JetBlue Airways |
| United Airlines Holdings |
JetBlue Airways and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and United Airlines
The main advantage of trading using opposite JetBlue Airways and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| JetBlue Airways vs. Grupo Sports World | JetBlue Airways vs. Verizon Communications | JetBlue Airways vs. Cognizant Technology Solutions | JetBlue Airways vs. The Home Depot |
| United Airlines vs. Verizon Communications | United Airlines vs. Genworth Financial | United Airlines vs. The Bank of | United Airlines vs. Deutsche Bank Aktiengesellschaft |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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