Correlation Between JetBlue Airways and Chesapeake Energy

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

Diversification Opportunities for JetBlue Airways and Chesapeake Energy

0.05

Correlation Coefficient

JetBlue Airways  Chesapeake Energy

Significant diversification

The 3 months correlation between JetBlue and Chesapeake is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy 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 Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Chesapeake Energy go up and down completely randomly.

Pair Corralation between JetBlue Airways and Chesapeake Energy

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 1.81 times more return on investment than Chesapeake Energy. However, JetBlue Airways is 1.81 times more volatile than Chesapeake Energy. It trades about 0.02 of its potential returns per unit of risk. Chesapeake Energy is currently generating about 0.0 per unit of risk. If you would invest  812.00  in JetBlue Airways Corp on October 3, 2024 and sell it today you would lose (26.00) from holding JetBlue Airways Corp or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.47%
Values	Daily Returns

JetBlue Airways Corp  vs.  Chesapeake Energy

JetBlue Airways Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 7 (%) 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.

Chesapeake Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Chesapeake Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JetBlue Airways and Chesapeake Energy

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

The idea behind JetBlue Airways Corp and Chesapeake Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.