Correlation Between JetBlue Airways and Stepan
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on JetBlue Airways and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Stepan.
Diversification Opportunities for JetBlue Airways and Stepan
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JetBlue and Stepan is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Stepan go up and down completely randomly.
Pair Corralation between JetBlue Airways and Stepan
Given the investment horizon of 90 days JetBlue Airways Corp is expected to under-perform the Stepan. In addition to that, JetBlue Airways is 3.44 times more volatile than Stepan Company. It trades about -0.07 of its total potential returns per unit of risk. Stepan Company is currently generating about 0.01 per unit of volatility. If you would invest 6,346 in Stepan Company on November 4, 2024 and sell it today you would lose (7.00) from holding Stepan Company or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JetBlue Airways Corp vs. Stepan Company
Performance |
| Timeline |
| JetBlue Airways Corp |
| Stepan Company |
JetBlue Airways and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and Stepan
The main advantage of trading using opposite JetBlue Airways and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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