Correlation Between AGNC INVESTMENT and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both AGNC INVESTMENT 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 AGNC INVESTMENT and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGNC INVESTMENT and Southwest Airlines Co, you can compare the effects of market volatilities on AGNC INVESTMENT 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 AGNC INVESTMENT with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC INVESTMENT and Southwest Airlines.
Diversification Opportunities for AGNC INVESTMENT and Southwest Airlines
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AGNC and Southwest is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and AGNC INVESTMENT 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 AGNC INVESTMENT 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 AGNC INVESTMENT i.e., AGNC INVESTMENT and Southwest Airlines go up and down completely randomly.
Pair Corralation between AGNC INVESTMENT and Southwest Airlines
Assuming the 90 days trading horizon AGNC INVESTMENT is expected to generate 1.53 times less return on investment than Southwest Airlines. In addition to that, AGNC INVESTMENT is 1.04 times more volatile than Southwest Airlines Co. It trades about 0.03 of its total potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.05 per unit of volatility. If you would invest 3,144 in Southwest Airlines Co on October 12, 2024 and sell it today you would earn a total of 29.00 from holding Southwest Airlines Co or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGNC INVESTMENT vs. Southwest Airlines Co
Performance |
| Timeline |
| AGNC INVESTMENT |
| Southwest Airlines |
AGNC INVESTMENT and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGNC INVESTMENT and Southwest Airlines
The main advantage of trading using opposite AGNC INVESTMENT and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC INVESTMENT 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.| AGNC INVESTMENT vs. Apple Inc | AGNC INVESTMENT vs. Apple Inc | AGNC INVESTMENT vs. Apple Inc | AGNC INVESTMENT vs. Apple Inc |
| Southwest Airlines vs. AGNC INVESTMENT | Southwest Airlines vs. Chuangs China Investments | Southwest Airlines vs. OBSERVE MEDICAL ASA | Southwest Airlines vs. AFFLUENT MEDICAL SAS |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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