Correlation Between Teradyne and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Teradyne 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 Teradyne and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and JetBlue Airways Corp, you can compare the effects of market volatilities on Teradyne 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 Teradyne with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and JetBlue Airways.
Diversification Opportunities for Teradyne and JetBlue Airways
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Teradyne and JetBlue is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne 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 Teradyne 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 Teradyne 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 Teradyne i.e., Teradyne and JetBlue Airways go up and down completely randomly.
Pair Corralation between Teradyne and JetBlue Airways
Considering the 90-day investment horizon Teradyne is expected to under-perform the JetBlue Airways. But the stock apears to be less risky and, when comparing its historical volatility, Teradyne is 1.63 times less risky than JetBlue Airways. The stock trades about -0.1 of its potential returns per unit of risk. The JetBlue Airways Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 485.00 in JetBlue Airways Corp on August 26, 2024 and sell it today you would earn a total of 124.00 from holding JetBlue Airways Corp or generate 25.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. JetBlue Airways Corp
Performance |
| Timeline |
| Teradyne |
| JetBlue Airways Corp |
Teradyne and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and JetBlue Airways
The main advantage of trading using opposite Teradyne and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne 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 Teradyne 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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