Correlation Between JetBlue Airways and Wasatch Frontier

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

Diversification Opportunities for JetBlue Airways and Wasatch Frontier

-0.27

Correlation Coefficient

JetBlue Airways  Wasatch Frontier

Very good diversification

The 3 months correlation between JetBlue and Wasatch is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Wasatch Frontier Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Frontier Emerging 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 Wasatch Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Frontier Emerging has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Wasatch Frontier go up and down completely randomly.

Pair Corralation between JetBlue Airways and Wasatch Frontier

Given the investment horizon of 90 days JetBlue Airways Corp is expected to generate 5.02 times more return on investment than Wasatch Frontier. However, JetBlue Airways is 5.02 times more volatile than Wasatch Frontier Emerging. It trades about 0.02 of its potential returns per unit of risk. Wasatch Frontier Emerging is currently generating about 0.07 per unit of risk. If you would invest  825.00  in JetBlue Airways Corp on October 23, 2024 and sell it today you would lose (61.00) from holding JetBlue Airways Corp or give up 7.39% of portfolio value over 90 days.

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

JetBlue Airways Corp  vs.  Wasatch Frontier Emerging

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.

Wasatch Frontier Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasatch Frontier Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Wasatch Frontier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JetBlue Airways and Wasatch Frontier

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

The idea behind JetBlue Airways Corp and Wasatch Frontier Emerging 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.