Correlation Between Snap and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and JetBlue Airways Corp, you can compare the effects of market volatilities on Snap 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 Snap with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and JetBlue Airways.
Diversification Opportunities for Snap and JetBlue Airways
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Snap and JetBlue is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc 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 Snap 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 Snap Inc 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 Snap i.e., Snap and JetBlue Airways go up and down completely randomly.
Pair Corralation between Snap and JetBlue Airways
Given the investment horizon of 90 days Snap Inc is expected to generate 0.71 times more return on investment than JetBlue Airways. However, Snap Inc is 1.42 times less risky than JetBlue Airways. It trades about 0.06 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.03 per unit of risk. If you would invest 1,059 in Snap Inc on August 26, 2024 and sell it today you would earn a total of 83.00 from holding Snap Inc or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. JetBlue Airways Corp
Performance |
| Timeline |
| Snap Inc |
| JetBlue Airways Corp |
Snap and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and JetBlue Airways
The main advantage of trading using opposite Snap and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and JetBlue Airways Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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