Correlation Between JetBlue Airways and RXO

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

Diversification Opportunities for JetBlue Airways and RXO

-0.78

Correlation Coefficient

JetBlue Airways  RXO

Pay attention - limited upside

The 3 months correlation between JetBlue and RXO is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and RXO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RXO Inc 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 RXO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RXO Inc has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and RXO go up and down completely randomly.

Pair Corralation between JetBlue Airways and RXO

Given the investment horizon of 90 days JetBlue Airways Corp is expected to under-perform the RXO. In addition to that, JetBlue Airways is 1.07 times more volatile than RXO Inc. It trades about 0.0 of its total potential returns per unit of risk. RXO Inc is currently generating about 0.19 per unit of volatility. If you would invest  2,346  in RXO Inc on October 22, 2024 and sell it today you would earn a total of  175.00  from holding RXO Inc or generate 7.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

JetBlue Airways Corp  vs.  RXO Inc

JetBlue Airways Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 2 (%) 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.

RXO Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RXO Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with JetBlue Airways and RXO

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

The idea behind JetBlue Airways Corp and RXO Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.