Correlation Between PLAIDInc and JetBlue Airways

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

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

Diversification Opportunities for PLAIDInc and JetBlue Airways

-0.55

Correlation Coefficient

PLAIDInc  JetBlue Airways

Excellent diversification

The 3 months correlation between PLAIDInc and JetBlue is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PLAIDInc 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 PLAIDInc 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 PLAIDInc 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 PLAIDInc i.e., PLAIDInc and JetBlue Airways go up and down completely randomly.

Pair Corralation between PLAIDInc and JetBlue Airways

Assuming the 90 days horizon PLAIDInc is expected to generate 1.25 times more return on investment than JetBlue Airways. However, PLAIDInc is 1.25 times more volatile than JetBlue Airways Corp. It trades about 0.19 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about -0.1 per unit of risk. If you would invest  514.00  in PLAIDInc on December 21, 2024 and sell it today you would earn a total of  462.00  from holding PLAIDInc or generate 89.88% return on investment over 90 days.

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

PLAIDInc  vs.  JetBlue Airways Corp

PLAIDInc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PLAIDInc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, PLAIDInc reported solid returns over the last few months and may actually be approaching a breakup point.

JetBlue Airways Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days JetBlue Airways Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PLAIDInc and JetBlue Airways

The main advantage of trading using opposite PLAIDInc and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAIDInc 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 PLAIDInc 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.