Correlation Between INTER CARS and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both INTER CARS 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 INTER CARS and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on INTER CARS 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 INTER CARS with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and SOUTHWEST AIRLINES.
Diversification Opportunities for INTER CARS and SOUTHWEST AIRLINES
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INTER and SOUTHWEST is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between INTER CARS and SOUTHWEST AIRLINES
Assuming the 90 days horizon INTER CARS is expected to generate 6.15 times less return on investment than SOUTHWEST AIRLINES. But when comparing it to its historical volatility, INTER CARS SA is 1.0 times less risky than SOUTHWEST AIRLINES. It trades about 0.0 of its potential returns per unit of risk. SOUTHWEST AIRLINES is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,722 in SOUTHWEST AIRLINES on August 31, 2024 and sell it today you would earn a total of 328.00 from holding SOUTHWEST AIRLINES or generate 12.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
INTER CARS SA vs. SOUTHWEST AIRLINES
Performance |
| Timeline |
| INTER CARS SA |
| SOUTHWEST AIRLINES |
INTER CARS and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and SOUTHWEST AIRLINES
The main advantage of trading using opposite INTER CARS and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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.| INTER CARS vs. PT Astra International | INTER CARS vs. Magna International | INTER CARS vs. Fuyao Glass Industry | INTER CARS vs. Superior Plus Corp |
| SOUTHWEST AIRLINES vs. TIANDE CHEMICAL | SOUTHWEST AIRLINES vs. WESTLAKE CHEMICAL | SOUTHWEST AIRLINES vs. CVW CLEANTECH INC | SOUTHWEST AIRLINES vs. Mitsui Chemicals |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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