Correlation Between JetBlue Airways and American States

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

Diversification Opportunities for JetBlue Airways and American States

-0.28

Correlation Coefficient

JetBlue Airways  American States

Very good diversification

The 3 months correlation between JetBlue and American is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water 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 American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and American States go up and down completely randomly.

Pair Corralation between JetBlue Airways and American States

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 2.21 times more return on investment than American States. However, JetBlue Airways is 2.21 times more volatile than American States Water. It trades about 0.16 of its potential returns per unit of risk. American States Water is currently generating about -0.17 per unit of risk. If you would invest  682.00  in JetBlue Airways Corp on October 8, 2024 and sell it today you would earn a total of  69.00  from holding JetBlue Airways Corp or generate 10.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.21%
Values	Daily Returns

JetBlue Airways Corp  vs.  American States Water

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.

American States Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American States Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American States is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JetBlue Airways and American States

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

The idea behind JetBlue Airways Corp and American States Water 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.