Correlation Between JetBlue Airways and Volaris
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Volaris 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 JetBlue Airways and Volaris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JetBlue Airways Corp and Volaris, you can compare the effects of market volatilities on JetBlue Airways and Volaris 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 JetBlue Airways with a short position of Volaris. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Volaris.
Diversification Opportunities for JetBlue Airways and Volaris
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JetBlue and Volaris is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Volaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volaris and JetBlue Airways 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 JetBlue Airways Corp are associated (or correlated) with Volaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volaris has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Volaris go up and down completely randomly.
Pair Corralation between JetBlue Airways and Volaris
Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 1.7 times more return on investment than Volaris. However, JetBlue Airways is 1.7 times more volatile than Volaris. It trades about 0.07 of its potential returns per unit of risk. Volaris is currently generating about 0.03 per unit of risk. If you would invest 534.00 in JetBlue Airways Corp on January 25, 2024 and sell it today you would earn a total of 76.00 from holding JetBlue Airways Corp or generate 14.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
JetBlue Airways Corp vs. Volaris
Performance |
| Timeline |
| JetBlue Airways Corp |
| Volaris |
JetBlue Airways and Volaris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and Volaris
The main advantage of trading using opposite JetBlue Airways and Volaris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, Volaris 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 Volaris will offset losses from the drop in Volaris' long position.| JetBlue Airways vs. Frontier Group Holdings | JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. American Airlines Group |
| Volaris vs. Allegiant Travel | Volaris vs. Azul SA | Volaris vs. Alaska Air Group | Volaris vs. International Consolidated Airlines |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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