Correlation Between JetBlue Airways and Nike
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on JetBlue Airways and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Nike.
Diversification Opportunities for JetBlue Airways and Nike
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JetBlue and Nike is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Nike go up and down completely randomly.
Pair Corralation between JetBlue Airways and Nike
Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 2.45 times more return on investment than Nike. However, JetBlue Airways is 2.45 times more volatile than Nike Inc. It trades about 0.06 of its potential returns per unit of risk. Nike Inc is currently generating about 0.03 per unit of risk. If you would invest 577.00 in JetBlue Airways Corp on September 2, 2024 and sell it today you would earn a total of 20.00 from holding JetBlue Airways Corp or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JetBlue Airways Corp vs. Nike Inc
Performance |
| Timeline |
| JetBlue Airways Corp |
| Nike Inc |
JetBlue Airways and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and Nike
The main advantage of trading using opposite JetBlue Airways and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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