Correlation Between JetBlue Airways and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and KNOT Offshore 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 KNOT Offshore 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 KNOT Offshore Partners, you can compare the effects of market volatilities on JetBlue Airways and KNOT Offshore 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 KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and KNOT Offshore.
Diversification Opportunities for JetBlue Airways and KNOT Offshore
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JetBlue and KNOT is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and KNOT Offshore Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOT Offshore Partners 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 KNOT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNOT Offshore Partners has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and KNOT Offshore go up and down completely randomly.
Pair Corralation between JetBlue Airways and KNOT Offshore
Given the investment horizon of 90 days JetBlue Airways Corp is expected to under-perform the KNOT Offshore. In addition to that, JetBlue Airways is 3.1 times more volatile than KNOT Offshore Partners. It trades about -0.15 of its total potential returns per unit of risk. KNOT Offshore Partners is currently generating about -0.08 per unit of volatility. If you would invest 615.00 in KNOT Offshore Partners on August 29, 2024 and sell it today you would lose (20.00) from holding KNOT Offshore Partners or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JetBlue Airways Corp vs. KNOT Offshore Partners
Performance |
| Timeline |
| JetBlue Airways Corp |
| KNOT Offshore Partners |
JetBlue Airways and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and KNOT Offshore
The main advantage of trading using opposite JetBlue Airways and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, KNOT Offshore 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 KNOT Offshore will offset losses from the drop in KNOT Offshore's 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 |
| KNOT Offshore vs. USA Compression Partners | KNOT Offshore vs. Dynagas LNG Partners | KNOT Offshore vs. Crossamerica Partners LP | KNOT Offshore vs. Delek Logistics Partners |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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