Correlation Between SkyWest and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both SkyWest 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 SkyWest and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and JetBlue Airways Corp, you can compare the effects of market volatilities on SkyWest 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 SkyWest with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and JetBlue Airways.
Diversification Opportunities for SkyWest and JetBlue Airways
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SkyWest and JetBlue is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest 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 SkyWest 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 SkyWest 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 SkyWest i.e., SkyWest and JetBlue Airways go up and down completely randomly.
Pair Corralation between SkyWest and JetBlue Airways
Given the investment horizon of 90 days SkyWest is expected to generate 0.52 times more return on investment than JetBlue Airways. However, SkyWest is 1.94 times less risky than JetBlue Airways. It trades about 0.15 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.06 per unit of risk. If you would invest 5,455 in SkyWest on October 25, 2024 and sell it today you would earn a total of 6,151 from holding SkyWest or generate 112.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. JetBlue Airways Corp
Performance |
| Timeline |
| SkyWest |
| JetBlue Airways Corp |
SkyWest and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and JetBlue Airways
The main advantage of trading using opposite SkyWest and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest 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.| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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