Correlation Between JetBlue Airways and Crown

Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and Crown 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 Crown 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 Crown Cork 7375, you can compare the effects of market volatilities on JetBlue Airways and Crown 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 Crown. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Crown.

Diversification Opportunities for JetBlue Airways and Crown

-0.29

Correlation Coefficient

JetBlue Airways  Crown

Very good diversification

The 3 months correlation between JetBlue and Crown is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Crown Cork 7375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Cork 7375 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 Crown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Cork 7375 has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Crown go up and down completely randomly.

Pair Corralation between JetBlue Airways and Crown

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 11.88 times more return on investment than Crown. However, JetBlue Airways is 11.88 times more volatile than Crown Cork 7375. It trades about 0.05 of its potential returns per unit of risk. Crown Cork 7375 is currently generating about 0.02 per unit of risk. If you would invest  590.00  in JetBlue Airways Corp on September 24, 2024 and sell it today you would earn a total of  154.00  from holding JetBlue Airways Corp or generate 26.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.19%
Values	Daily Returns

JetBlue Airways Corp  vs.  Crown Cork 7375

JetBlue Airways Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, JetBlue Airways unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crown Cork 7375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Cork 7375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Crown is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JetBlue Airways and Crown

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

The idea behind JetBlue Airways Corp and Crown Cork 7375 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.