Correlation Between LATAM Airlines and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both LATAM Airlines and JetBlue Airways 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 LATAM Airlines and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LATAM Airlines Group and JetBlue Airways Corp, you can compare the effects of market volatilities on LATAM Airlines and JetBlue Airways 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 LATAM Airlines with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and JetBlue Airways.
Diversification Opportunities for LATAM Airlines and JetBlue Airways
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LATAM and JetBlue is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and JetBlue Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetBlue Airways Corp and LATAM Airlines 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 LATAM Airlines Group are associated (or correlated) with JetBlue Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JetBlue Airways Corp has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and JetBlue Airways go up and down completely randomly.
Pair Corralation between LATAM Airlines and JetBlue Airways
Considering the 90-day investment horizon LATAM Airlines Group is expected to generate 0.41 times more return on investment than JetBlue Airways. However, LATAM Airlines Group is 2.46 times less risky than JetBlue Airways. It trades about 0.09 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.01 per unit of risk. If you would invest 2,470 in LATAM Airlines Group on September 3, 2024 and sell it today you would earn a total of 303.00 from holding LATAM Airlines Group or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 18.38% |
| Values | Daily Returns |
LATAM Airlines Group vs. JetBlue Airways Corp
Performance |
| Timeline |
| LATAM Airlines Group |
| JetBlue Airways Corp |
LATAM Airlines and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and JetBlue Airways
The main advantage of trading using opposite LATAM Airlines and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, JetBlue Airways 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 JetBlue Airways will offset losses from the drop in JetBlue Airways' long position.| LATAM Airlines vs. Allegiant Travel | LATAM Airlines vs. Copa Holdings SA | LATAM Airlines vs. SkyWest | LATAM Airlines vs. Air Transport Services |
| JetBlue Airways vs. Allegiant Travel | JetBlue Airways vs. Copa Holdings SA | JetBlue Airways vs. SkyWest | JetBlue Airways vs. Air Transport Services |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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