Correlation Between JetBlue Airways and Werner Enterprises

Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Werner Enterprises 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 Werner Enterprises 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 Werner Enterprises, you can compare the effects of market volatilities on JetBlue Airways and Werner Enterprises 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 Werner Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Werner Enterprises.

Diversification Opportunities for JetBlue Airways and Werner Enterprises

-0.01

Correlation Coefficient

JetBlue Airways  Werner Enterprises

Good diversification

The 3 months correlation between JetBlue and Werner is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises 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 Werner Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werner Enterprises has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Werner Enterprises go up and down completely randomly.

Pair Corralation between JetBlue Airways and Werner Enterprises

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 2.59 times more return on investment than Werner Enterprises. However, JetBlue Airways is 2.59 times more volatile than Werner Enterprises. It trades about 0.0 of its potential returns per unit of risk. Werner Enterprises is currently generating about -0.05 per unit of risk. If you would invest  701.00  in JetBlue Airways Corp on February 3, 2024 and sell it today you would lose (121.00) from holding JetBlue Airways Corp or give up 17.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JetBlue Airways Corp  vs.  Werner Enterprises

JetBlue Airways Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, JetBlue Airways may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Werner Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Werner Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with JetBlue Airways and Werner Enterprises

The main advantage of trading using opposite JetBlue Airways and Werner Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, Werner Enterprises 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 Werner Enterprises will offset losses from the drop in Werner Enterprises' long position.

The idea behind JetBlue Airways Corp and Werner Enterprises 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.

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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.