Correlation Between Southwest Airlines and National Bank
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and National Bank 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 Southwest Airlines and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines Co and National Bank of, you can compare the effects of market volatilities on Southwest Airlines and National Bank 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 Southwest Airlines with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and National Bank.
Diversification Opportunities for Southwest Airlines and National Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southwest and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Southwest Airlines 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 Southwest Airlines Co are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and National Bank go up and down completely randomly.
Pair Corralation between Southwest Airlines and National Bank
Assuming the 90 days trading horizon Southwest Airlines is expected to generate 11.82 times less return on investment than National Bank. In addition to that, Southwest Airlines is 1.58 times more volatile than National Bank of. It trades about 0.0 of its total potential returns per unit of risk. National Bank of is currently generating about 0.03 per unit of volatility. If you would invest 241.00 in National Bank of on September 2, 2024 and sell it today you would earn a total of 37.00 from holding National Bank of or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Southwest Airlines Co vs. National Bank of
Performance |
| Timeline |
| Southwest Airlines |
| National Bank |
Southwest Airlines and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and National Bank
The main advantage of trading using opposite Southwest Airlines and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Southwest Airlines vs. Uniper SE | Southwest Airlines vs. Mulberry Group PLC | Southwest Airlines vs. London Security Plc | Southwest Airlines vs. Triad Group PLC |
| National Bank vs. Uniper SE | National Bank vs. Mulberry Group PLC | National Bank vs. London Security Plc | National Bank vs. Triad Group PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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