Correlation Between Sibanye Stillwater and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Sibanye Stillwater and Southwest Airlines 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 Sibanye Stillwater and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sibanye Stillwater Limited and Southwest Airlines Co, you can compare the effects of market volatilities on Sibanye Stillwater and Southwest Airlines 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 Sibanye Stillwater with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sibanye Stillwater and Southwest Airlines.
Diversification Opportunities for Sibanye Stillwater and Southwest Airlines
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sibanye and Southwest is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Stillwater Limited and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Sibanye Stillwater 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 Sibanye Stillwater Limited are associated (or correlated) with Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of Sibanye Stillwater i.e., Sibanye Stillwater and Southwest Airlines go up and down completely randomly.
Pair Corralation between Sibanye Stillwater and Southwest Airlines
Assuming the 90 days horizon Sibanye Stillwater Limited is expected to generate 2.38 times more return on investment than Southwest Airlines. However, Sibanye Stillwater is 2.38 times more volatile than Southwest Airlines Co. It trades about 0.11 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.15 per unit of risk. If you would invest 96.00 in Sibanye Stillwater Limited on September 14, 2024 and sell it today you would earn a total of 7.00 from holding Sibanye Stillwater Limited or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sibanye Stillwater Limited vs. Southwest Airlines Co
Performance |
| Timeline |
| Sibanye Stillwater |
| Southwest Airlines |
Sibanye Stillwater and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sibanye Stillwater and Southwest Airlines
The main advantage of trading using opposite Sibanye Stillwater and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sibanye Stillwater position performs unexpectedly, Southwest Airlines 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 Southwest Airlines will offset losses from the drop in Southwest Airlines' long position.| Sibanye Stillwater vs. Southwest Airlines Co | Sibanye Stillwater vs. Singapore Airlines Limited | Sibanye Stillwater vs. Focus Home Interactive | Sibanye Stillwater vs. Tri Pointe Homes |
| Southwest Airlines vs. RYANAIR HLDGS ADR | Southwest Airlines vs. Ryanair Holdings plc | Southwest Airlines vs. Superior Plus Corp | Southwest Airlines vs. SIVERS SEMICONDUCTORS AB |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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