Correlation Between CGN Power and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both CGN Power 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 CGN Power and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGN Power Co and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on CGN Power 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 CGN Power with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGN Power and SOUTHWEST AIRLINES.
Diversification Opportunities for CGN Power and SOUTHWEST AIRLINES
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CGN and SOUTHWEST is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CGN Power Co and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and CGN Power 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 CGN Power Co 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 CGN Power i.e., CGN Power and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between CGN Power and SOUTHWEST AIRLINES
If you would invest 2,762 in SOUTHWEST AIRLINES on September 5, 2024 and sell it today you would earn a total of 451.00 from holding SOUTHWEST AIRLINES or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CGN Power Co vs. SOUTHWEST AIRLINES
Performance |
| Timeline |
| CGN Power |
| SOUTHWEST AIRLINES |
CGN Power and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGN Power and SOUTHWEST AIRLINES
The main advantage of trading using opposite CGN Power and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGN Power 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.| CGN Power vs. SOUTHWEST AIRLINES | CGN Power vs. Silicon Motion Technology | CGN Power vs. Aegean Airlines SA | CGN Power vs. Eastman Chemical |
| SOUTHWEST AIRLINES vs. FLOW TRADERS LTD | SOUTHWEST AIRLINES vs. CARSALESCOM | SOUTHWEST AIRLINES vs. KENNAMETAL INC | SOUTHWEST AIRLINES vs. CANON MARKETING JP |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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