Correlation Between JetBlue Airways and Aqua America

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

Diversification Opportunities for JetBlue Airways and Aqua America

-0.56

Correlation Coefficient

JetBlue Airways  Aqua America

Excellent diversification

The 3 months correlation between JetBlue and Aqua is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America 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 Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Aqua America go up and down completely randomly.

Pair Corralation between JetBlue Airways and Aqua America

Given the investment horizon of 90 days JetBlue Airways Corp is expected to under-perform the Aqua America. In addition to that, JetBlue Airways is 2.94 times more volatile than Aqua America. It trades about -0.08 of its total potential returns per unit of risk. Aqua America is currently generating about 0.05 per unit of volatility. If you would invest  3,432  in Aqua America on December 21, 2024 and sell it today you would earn a total of  155.00  from holding Aqua America or generate 4.52% return on investment over 90 days.

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

JetBlue Airways Corp  vs.  Aqua America

JetBlue Airways Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days JetBlue Airways Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aqua America

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqua America are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Aqua America is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JetBlue Airways and Aqua America

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

The idea behind JetBlue Airways Corp and Aqua America 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.