Correlation Between JetBlue Airways and HNX

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

Diversification Opportunities for JetBlue Airways and HNX

-0.68

Correlation Coefficient

JetBlue Airways  HNX

Excellent diversification

The 3 months correlation between JetBlue and HNX is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and HNX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNX 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 HNX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNX has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and HNX go up and down completely randomly.

Pair Corralation between JetBlue Airways and HNX

Given the investment horizon of 90 days JetBlue Airways Corp is expected to under-perform the HNX. In addition to that, JetBlue Airways is 8.46 times more volatile than HNX. It trades about -0.09 of its total potential returns per unit of risk. HNX is currently generating about 0.21 per unit of volatility. If you would invest  22,851  in HNX on December 22, 2024 and sell it today you would earn a total of  1,731  from holding HNX or generate 7.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

JetBlue Airways Corp  vs.  HNX

Pair Trading with JetBlue Airways and HNX

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

The idea behind JetBlue Airways Corp and HNX 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.