Correlation Between Southwest Airlines and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Southwest Airlines and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Supermarket Income.
Diversification Opportunities for Southwest Airlines and Supermarket Income
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southwest and Supermarket is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Supermarket Income go up and down completely randomly.
Pair Corralation between Southwest Airlines and Supermarket Income
Assuming the 90 days trading horizon Southwest Airlines Co is expected to under-perform the Supermarket Income. In addition to that, Southwest Airlines is 1.45 times more volatile than Supermarket Income REIT. It trades about -0.02 of its total potential returns per unit of risk. Supermarket Income REIT is currently generating about 0.28 per unit of volatility. If you would invest 6,670 in Supermarket Income REIT on December 1, 2024 and sell it today you would earn a total of 400.00 from holding Supermarket Income REIT or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. Supermarket Income REIT
Performance |
| Timeline |
| Southwest Airlines |
| Supermarket Income REIT |
Southwest Airlines and Supermarket Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Supermarket Income
The main advantage of trading using opposite Southwest Airlines and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.| Southwest Airlines vs. Amedeo Air Four | Southwest Airlines vs. Finnair Oyj | Southwest Airlines vs. Air Products Chemicals | Southwest Airlines vs. Charter Communications Cl |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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