Correlation Between PLAYTIKA HOLDING and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both PLAYTIKA HOLDING 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 PLAYTIKA HOLDING and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYTIKA HOLDING DL 01 and Southwest Airlines Co, you can compare the effects of market volatilities on PLAYTIKA HOLDING 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 PLAYTIKA HOLDING with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and Southwest Airlines.
Diversification Opportunities for PLAYTIKA HOLDING and Southwest Airlines
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PLAYTIKA and Southwest is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 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 PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Southwest Airlines go up and down completely randomly.
Pair Corralation between PLAYTIKA HOLDING and Southwest Airlines
Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the Southwest Airlines. In addition to that, PLAYTIKA HOLDING is 1.94 times more volatile than Southwest Airlines Co. It trades about -0.39 of its total potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.12 per unit of volatility. If you would invest 3,088 in Southwest Airlines Co on September 26, 2024 and sell it today you would earn a total of 92.00 from holding Southwest Airlines Co or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYTIKA HOLDING DL 01 vs. Southwest Airlines Co
Performance |
| Timeline |
| PLAYTIKA HOLDING |
| Southwest Airlines |
PLAYTIKA HOLDING and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYTIKA HOLDING and Southwest Airlines
The main advantage of trading using opposite PLAYTIKA HOLDING and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTIKA HOLDING 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.| PLAYTIKA HOLDING vs. Nintendo Co | PLAYTIKA HOLDING vs. Sea Limited | PLAYTIKA HOLDING vs. Electronic Arts | PLAYTIKA HOLDING vs. NEXON Co |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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