Correlation Between Pool and JetBlue Airways

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Can any of the company-specific risk be diversified away by investing in both Pool 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 Pool and JetBlue Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pool Corporation and JetBlue Airways Corp, you can compare the effects of market volatilities on Pool 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 Pool with a short position of JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and JetBlue Airways.

Diversification Opportunities for Pool and JetBlue Airways

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Pool and JetBlue is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. 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 Pool 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 Pool Corporation 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 Pool i.e., Pool and JetBlue Airways go up and down completely randomly.

Pair Corralation between Pool and JetBlue Airways

Given the investment horizon of 90 days Pool Corporation is expected to under-perform the JetBlue Airways. But the stock apears to be less risky and, when comparing its historical volatility, Pool Corporation is 2.55 times less risky than JetBlue Airways. The stock trades about -0.01 of its potential returns per unit of risk. The JetBlue Airways Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  575.00  in JetBlue Airways Corp on September 17, 2024 and sell it today you would earn a total of  129.00  from holding JetBlue Airways Corp or generate 22.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pool Corp.  vs.  JetBlue Airways Corp

 Performance 
       Timeline  
Pool 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Pool is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
JetBlue Airways Corp 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 7 (%) 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.

Pool and JetBlue Airways Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pool and JetBlue Airways

The main advantage of trading using opposite Pool and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool 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 Pool Corporation 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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