Correlation Between JetBlue Airways and Azul SA

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

Diversification Opportunities for JetBlue Airways and Azul SA

0.25

Correlation Coefficient

JetBlue Airways  Azul SA

Modest diversification

The 3 months correlation between JetBlue and Azul is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Azul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azul SA 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 Azul SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azul SA has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Azul SA go up and down completely randomly.

Pair Corralation between JetBlue Airways and Azul SA

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 0.69 times more return on investment than Azul SA. However, JetBlue Airways Corp is 1.45 times less risky than Azul SA. It trades about 0.08 of its potential returns per unit of risk. Azul SA is currently generating about 0.04 per unit of risk. If you would invest  502.00  in JetBlue Airways Corp on August 31, 2024 and sell it today you would earn a total of  94.00  from holding JetBlue Airways Corp or generate 18.73% return on investment over 90 days.

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

JetBlue Airways Corp  vs.  Azul SA

JetBlue Airways Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, JetBlue Airways unveiled solid returns over the last few months and may actually be approaching a breakup point.

Azul SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azul SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Azul SA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JetBlue Airways and Azul SA

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

The idea behind JetBlue Airways Corp and Azul SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.