Correlation Between JetBlue Airways and Universal Media
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Universal Media 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 Universal Media 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 Universal Media Group, you can compare the effects of market volatilities on JetBlue Airways and Universal Media 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 Universal Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Universal Media.
Diversification Opportunities for JetBlue Airways and Universal Media
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JetBlue and Universal is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Universal Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Media Group 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 Universal Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Media Group has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Universal Media go up and down completely randomly.
Pair Corralation between JetBlue Airways and Universal Media
Given the investment horizon of 90 days JetBlue Airways is expected to generate 13.85 times less return on investment than Universal Media. But when comparing it to its historical volatility, JetBlue Airways Corp is 6.01 times less risky than Universal Media. It trades about 0.09 of its potential returns per unit of risk. Universal Media Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Universal Media Group on August 31, 2024 and sell it today you would earn a total of 1.20 from holding Universal Media Group or generate 48.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JetBlue Airways Corp vs. Universal Media Group
Performance |
| Timeline |
| JetBlue Airways Corp |
| Universal Media Group |
JetBlue Airways and Universal Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and Universal Media
The main advantage of trading using opposite JetBlue Airways and Universal Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, Universal Media 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 Universal Media will offset losses from the drop in Universal Media'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 |
| Universal Media vs. Cars Inc | Universal Media vs. FormFactor | Universal Media vs. Playtika Holding Corp | Universal Media vs. Mind Technology |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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