Correlation Between JetBlue Airways and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and CenterPoint 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 CenterPoint 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 CenterPoint Energy, you can compare the effects of market volatilities on JetBlue Airways and CenterPoint 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 CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and CenterPoint Energy.
Diversification Opportunities for JetBlue Airways and CenterPoint Energy
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between JetBlue and CenterPoint is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and CenterPoint Energy go up and down completely randomly.
Pair Corralation between JetBlue Airways and CenterPoint Energy
Given the investment horizon of 90 days JetBlue Airways is expected to generate 1.16 times less return on investment than CenterPoint Energy. In addition to that, JetBlue Airways is 3.62 times more volatile than CenterPoint Energy. It trades about 0.04 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.17 per unit of volatility. If you would invest 2,955 in CenterPoint Energy on September 23, 2024 and sell it today you would earn a total of 299.00 from holding CenterPoint Energy or generate 10.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
JetBlue Airways Corp vs. CenterPoint Energy
Performance |
Timeline |
JetBlue Airways Corp |
CenterPoint Energy |
JetBlue Airways and CenterPoint Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JetBlue Airways and CenterPoint Energy
The main advantage of trading using opposite JetBlue Airways and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways position performs unexpectedly, CenterPoint 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. Frontier Group Holdings |
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Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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