Correlation Between JetBlue Airways and Citizens

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

Diversification Opportunities for JetBlue Airways and Citizens

0.64

Correlation Coefficient

JetBlue Airways  Citizens

Poor diversification

The 3 months correlation between JetBlue and Citizens is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of JetBlue Airways i.e., JetBlue Airways and Citizens go up and down completely randomly.

Pair Corralation between JetBlue Airways and Citizens

Given the investment horizon of 90 days JetBlue Airways is expected to generate 1.95 times less return on investment than Citizens. But when comparing it to its historical volatility, JetBlue Airways Corp is 1.09 times less risky than Citizens. It trades about 0.08 of its potential returns per unit of risk. Citizens is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Citizens on September 3, 2024 and sell it today you would earn a total of  144.00  from holding Citizens or generate 47.37% return on investment over 90 days.

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

JetBlue Airways Corp  vs.  Citizens

JetBlue Airways Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, JetBlue Airways unveiled solid returns over the last few months and may actually be approaching a breakup point.

Citizens

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Citizens sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JetBlue Airways and Citizens

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

The idea behind JetBlue Airways Corp and Citizens 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.