Correlation Between JetBlue Airways and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks Plc, you can compare the effects of market volatilities on JetBlue Airways and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Fevertree Drinks.
Diversification Opportunities for JetBlue Airways and Fevertree Drinks
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JetBlue and Fevertree is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Fevertree Drinks go up and down completely randomly.
Pair Corralation between JetBlue Airways and Fevertree Drinks
Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 4.15 times more return on investment than Fevertree Drinks. However, JetBlue Airways is 4.15 times more volatile than Fevertree Drinks Plc. It trades about 0.09 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.47 per unit of risk. If you would invest 563.00 in JetBlue Airways Corp on August 31, 2024 and sell it today you would earn a total of 33.00 from holding JetBlue Airways Corp or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JetBlue Airways Corp vs. Fevertree Drinks Plc
Performance |
| Timeline |
| JetBlue Airways Corp |
| Fevertree Drinks Plc |
JetBlue Airways and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and Fevertree Drinks
The main advantage of trading using opposite JetBlue Airways and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| JetBlue Airways vs. Frontier Group Holdings | JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. American Airlines Group |
| Fevertree Drinks vs. PepsiCo | Fevertree Drinks vs. Coca Cola Consolidated | Fevertree Drinks vs. Monster Beverage Corp | Fevertree Drinks vs. Celsius 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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