Correlation Between International Consolidated and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and JetBlue Airways Corp, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and JetBlue Airways.
Diversification Opportunities for International Consolidated and JetBlue Airways
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between International and JetBlue is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air 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 International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and JetBlue Airways go up and down completely randomly.
Pair Corralation between International Consolidated and JetBlue Airways
Assuming the 90 days horizon International Consolidated is expected to generate 2.67 times less return on investment than JetBlue Airways. But when comparing it to its historical volatility, International Consolidated Airlines is 1.8 times less risky than JetBlue Airways. It trades about 0.11 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 500.00 in JetBlue Airways Corp on January 20, 2024 and sell it today you would earn a total of 211.00 from holding JetBlue Airways Corp or generate 42.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. JetBlue Airways Corp
Performance |
| Timeline |
| International Consolidated |
| JetBlue Airways Corp |
International Consolidated and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and JetBlue Airways
The main advantage of trading using opposite International Consolidated and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Air France KLM SA | International Consolidated vs. Air France KLM | International Consolidated vs. Finnair Oyj | International Consolidated vs. AirAsia Group Berhad |
| JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. Spirit Airlines | JetBlue Airways vs. United Airlines Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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