Correlation Between JetBlue Airways and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and ECD Automotive 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 ECD Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JetBlue Airways Corp and ECD Automotive Design, you can compare the effects of market volatilities on JetBlue Airways and ECD Automotive 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 ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and ECD Automotive.
Diversification Opportunities for JetBlue Airways and ECD Automotive
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between JetBlue and ECD is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design 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 Corp are associated (or correlated) with ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and ECD Automotive go up and down completely randomly.
Pair Corralation between JetBlue Airways and ECD Automotive
Given the investment horizon of 90 days JetBlue Airways is expected to generate 29.96 times less return on investment than ECD Automotive. But when comparing it to its historical volatility, JetBlue Airways Corp is 8.18 times less risky than ECD Automotive. It trades about 0.03 of its potential returns per unit of risk. ECD Automotive Design is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4.00 in ECD Automotive Design on September 12, 2024 and sell it today you would lose (2.35) from holding ECD Automotive Design or give up 58.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.21% |
| Values | Daily Returns |
JetBlue Airways Corp vs. ECD Automotive Design
Performance |
| Timeline |
| JetBlue Airways Corp |
| ECD Automotive Design |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
JetBlue Airways and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and ECD Automotive
The main advantage of trading using opposite JetBlue Airways and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.| JetBlue Airways vs. Volaris | JetBlue Airways vs. flyExclusive, | JetBlue Airways vs. Alaska Air Group | JetBlue Airways vs. Copa Holdings SA |
| ECD Automotive vs. GMS Inc | ECD Automotive vs. Copa Holdings SA | ECD Automotive vs. JetBlue Airways Corp | ECD Automotive vs. Olympic Steel |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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