Correlation Between JetBlue Airways and Xingyuan Environment

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

Diversification Opportunities for JetBlue Airways and Xingyuan Environment

-0.65

Correlation Coefficient

JetBlue Airways  Xingyuan Environment

Excellent diversification

The 3 months correlation between JetBlue and Xingyuan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Xingyuan Environment Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingyuan Environment 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 Xingyuan Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingyuan Environment has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Xingyuan Environment go up and down completely randomly.

Pair Corralation between JetBlue Airways and Xingyuan Environment

Given the investment horizon of 90 days JetBlue Airways is expected to generate 2.0 times less return on investment than Xingyuan Environment. But when comparing it to its historical volatility, JetBlue Airways Corp is 1.39 times less risky than Xingyuan Environment. It trades about 0.05 of its potential returns per unit of risk. Xingyuan Environment Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Xingyuan Environment Technology on October 23, 2024 and sell it today you would earn a total of  35.00  from holding Xingyuan Environment Technology or generate 15.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

JetBlue Airways Corp  vs.  Xingyuan Environment Technolog

JetBlue Airways Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 3 (%) 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 February 2025.

Xingyuan Environment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xingyuan Environment Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xingyuan Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JetBlue Airways and Xingyuan Environment

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

The idea behind JetBlue Airways Corp and Xingyuan Environment Technology 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.