{"id":56565,"date":"2021-04-22T21:59:52","date_gmt":"2021-04-23T04:59:52","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=56565"},"modified":"2021-04-23T10:42:39","modified_gmt":"2021-04-23T17:42:39","slug":"surprisingly-consistent-relationship-jets-traveler-throughput","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2021\/04\/22\/surprisingly-consistent-relationship-jets-traveler-throughput\/","title":{"rendered":"A Surprisingly Consistent Relationship for JETS and Traveler Throughput"},"content":{"rendered":"\n

The Relationship<\/strong><\/h2>\n\n\n\n

At its height last March, the U.S. Global Jets ETF (JETS) still could not close all its pandemic-driven losses. JETS was a 5.9% gain from finally returning to where it last traded at its 200-day moving average (DMA) (the blue line in the stock chart below). Similarly, the number of travelers at U.S. airports as measured by security screenings<\/a> from the U.S. Transportation Security Administration (TSA) stopped short of its pre-pandemic levels from the same late March date in 2019. Throughput needed to gain another 58.9% to fill the gap. In between, the trends of throughput vs JETS have maintained a surprisingly consistent relationship. Indeed, the daily correlation between the two sits at a relatively high 0.68. <\/p>\n\n\n\n

Correlation runs on a scale from -1 to 1 where 1 is a perfectly linear relationship and -1 is an exactly inverse linear relationship. At zero there is absolutely no relationship between the two quantities. The chart below gives a visual representation of this close relationship. The vertical axes are in log scale to make the trends clearer. The left axis measures traveler throughput. The right axis measures the price per share for JETS. The horizontal axis is the date series of available TSA data. The black line shows throughput for the dates shown on the horizontal axis. The yellow line shows the throughput for the prior year. For example, the initial plunge in throughput from the pandemic is shown on the right hand side of the chart because the collapse happened a year ago<\/a>. The red line represents the stock price for JETS.<\/p>\n\n\n\n

\"A<\/a>
A relatively good direct correlation exists between total traveler throughput and the U.S. Global Jets ETF (JETS). Data from the Transportation Security Administration<\/a> (TSA) and Yahoo Finance<\/a>.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

There are just two periods in the above time series where the relationship (correlation) between throughput and JETS broke down notably but temporarily. <\/p>\n\n\n\n

  1. JETS made a new all-time low in May even as throughput was in a sharp recovery mode. The throughput became a leading indicator.<\/li>
  2. JETS corrected sharply from a parabolic run-up in June<\/a> even as throughput continued higher for another month. Again, the throughput became a lead indicator both in suggesting the parabolic run-up could not last and that the correction would bottom out well above the May lows.<\/li><\/ol>\n\n\n\n

    In other words, when trading JETS, check the TSA’s traveler throughput. If the two trends agree, trade JETS with the trend. Currently, the correlation is breaking down thanks to the UAL-inspired pullback. With throughput remaining stable, I expect JETS to bottom out well above the last low during the January, 2021 consolidation around $22. The uptrending 200DMA is quickly rising to meet that $22 level. (All these data and charts are stored in a Google sheet<\/a>).<\/p>\n\n\n\n