Correlation Between JetBlue Airways and Summit Materials
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on JetBlue Airways and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Summit Materials.
Diversification Opportunities for JetBlue Airways and Summit Materials
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JetBlue and Summit is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Summit Materials go up and down completely randomly.
Pair Corralation between JetBlue Airways and Summit Materials
Given the investment horizon of 90 days JetBlue Airways is expected to generate 1.71 times less return on investment than Summit Materials. In addition to that, JetBlue Airways is 1.94 times more volatile than Summit Materials. It trades about 0.03 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.11 per unit of volatility. If you would invest 3,843 in Summit Materials on August 31, 2024 and sell it today you would earn a total of 1,251 from holding Summit Materials or generate 32.55% 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. Summit Materials
Performance |
| Timeline |
| JetBlue Airways Corp |
| Summit Materials |
JetBlue Airways and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and Summit Materials
The main advantage of trading using opposite JetBlue Airways and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' 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 |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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