Correlation Between JetBlue Airways and LILLY

Can any of the company-specific risk be diversified away by investing in both JetBlue Airways and LILLY 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 LILLY 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 LILLY ELI 7125, you can compare the effects of market volatilities on JetBlue Airways and LILLY 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 LILLY. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and LILLY.

Diversification Opportunities for JetBlue Airways and LILLY

0.26

Correlation Coefficient

JetBlue Airways  LILLY

Modest diversification

The 3 months correlation between JetBlue and LILLY is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and LILLY ELI 7125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LILLY ELI 7125 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 LILLY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LILLY ELI 7125 has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and LILLY go up and down completely randomly.

Pair Corralation between JetBlue Airways and LILLY

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 5.14 times more return on investment than LILLY. However, JetBlue Airways is 5.14 times more volatile than LILLY ELI 7125. It trades about 0.01 of its potential returns per unit of risk. LILLY ELI 7125 is currently generating about -0.01 per unit of risk. If you would invest  865.00  in JetBlue Airways Corp on October 12, 2024 and sell it today you would lose (95.00) from holding JetBlue Airways Corp or give up 10.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.97%
Values	Daily Returns

JetBlue Airways Corp  vs.  LILLY ELI 7125

JetBlue Airways Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 5 (%) 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.

LILLY ELI 7125

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LILLY ELI 7125 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LILLY 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 LILLY

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

The idea behind JetBlue Airways Corp and LILLY ELI 7125 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.