Correlation Between Lion One and JetBlue Airways

Can any of the company-specific risk be diversified away by investing in both Lion One and JetBlue Airways 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 Lion One and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lion One Metals and JetBlue Airways Corp, you can compare the effects of market volatilities on Lion One and JetBlue Airways 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 Lion One with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and JetBlue Airways.

Diversification Opportunities for Lion One and JetBlue Airways

-0.36

Correlation Coefficient

Lion One  JetBlue Airways

Very good diversification

The 3 months correlation between Lion and JetBlue is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and JetBlue Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetBlue Airways Corp and Lion One 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 Lion One Metals are associated (or correlated) with JetBlue Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JetBlue Airways Corp has no effect on the direction of Lion One i.e., Lion One and JetBlue Airways go up and down completely randomly.

Pair Corralation between Lion One and JetBlue Airways

Assuming the 90 days horizon Lion One is expected to generate 279.3 times less return on investment than JetBlue Airways. In addition to that, Lion One is 1.14 times more volatile than JetBlue Airways Corp. It trades about 0.0 of its total potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.05 per unit of volatility. If you would invest  597.00  in JetBlue Airways Corp on November 28, 2024 and sell it today you would earn a total of  49.00  from holding JetBlue Airways Corp or generate 8.21% return on investment over 90 days.

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

Lion One Metals  vs.  JetBlue Airways Corp

Lion One Metals

Risk-Adjusted Performance

Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JetBlue Airways Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 4 (%) 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.

Pair Trading with Lion One and JetBlue Airways

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

The idea behind Lion One Metals and JetBlue Airways Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.