Correlation Between FUTURE GAMING and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both FUTURE GAMING 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 FUTURE GAMING and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUTURE GAMING GRP and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on FUTURE GAMING 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 FUTURE GAMING with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUTURE GAMING and SOUTHWEST AIRLINES.
Diversification Opportunities for FUTURE GAMING and SOUTHWEST AIRLINES
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FUTURE and SOUTHWEST is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding FUTURE GAMING GRP and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and FUTURE GAMING 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 FUTURE GAMING GRP 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 FUTURE GAMING i.e., FUTURE GAMING and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between FUTURE GAMING and SOUTHWEST AIRLINES
Assuming the 90 days trading horizon FUTURE GAMING GRP is expected to under-perform the SOUTHWEST AIRLINES. In addition to that, FUTURE GAMING is 2.57 times more volatile than SOUTHWEST AIRLINES. It trades about -0.27 of its total potential returns per unit of risk. SOUTHWEST AIRLINES is currently generating about 0.11 per unit of volatility. If you would invest 3,075 in SOUTHWEST AIRLINES on September 12, 2024 and sell it today you would earn a total of 120.00 from holding SOUTHWEST AIRLINES or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
FUTURE GAMING GRP vs. SOUTHWEST AIRLINES
Performance |
| Timeline |
| FUTURE GAMING GRP |
| SOUTHWEST AIRLINES |
FUTURE GAMING and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUTURE GAMING and SOUTHWEST AIRLINES
The main advantage of trading using opposite FUTURE GAMING and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUTURE GAMING 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's long position.| FUTURE GAMING vs. Scientific Games | FUTURE GAMING vs. International Game Technology | FUTURE GAMING vs. Superior Plus Corp | FUTURE GAMING vs. SIVERS SEMICONDUCTORS AB |
| SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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