Correlation Between JetBlue Airways and NatWest Group

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

Diversification Opportunities for JetBlue Airways and NatWest Group

0.13

Correlation Coefficient

JetBlue Airways  NatWest Group

Average diversification

The 3 months correlation between JetBlue and NatWest is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and NatWest Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NatWest Group plc 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 NatWest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NatWest Group plc has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and NatWest Group go up and down completely randomly.

Pair Corralation between JetBlue Airways and NatWest Group

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 2.34 times more return on investment than NatWest Group. However, JetBlue Airways is 2.34 times more volatile than NatWest Group plc. It trades about 0.16 of its potential returns per unit of risk. NatWest Group plc is currently generating about 0.14 per unit of risk. If you would invest  605.00  in JetBlue Airways Corp on October 8, 2024 and sell it today you would earn a total of  146.00  from holding JetBlue Airways Corp or generate 24.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.5%
Values	Daily Returns

JetBlue Airways Corp  vs.  NatWest Group plc

JetBlue Airways Corp

Risk-Adjusted Performance

3 of 100

Weak

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.

NatWest Group plc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NatWest Group plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NatWest Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JetBlue Airways and NatWest Group

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

The idea behind JetBlue Airways Corp and NatWest Group plc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.