Correlation Between Advance Auto and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Advance Auto 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 Advance Auto and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and Southwest Airlines Co, you can compare the effects of market volatilities on Advance Auto 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 Advance Auto with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Southwest Airlines.
Diversification Opportunities for Advance Auto and Southwest Airlines
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advance and Southwest is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Advance Auto 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 Advance Auto Parts 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 Advance Auto i.e., Advance Auto and Southwest Airlines go up and down completely randomly.
Pair Corralation between Advance Auto and Southwest Airlines
If you would invest 1,427 in Advance Auto Parts on September 13, 2024 and sell it today you would earn a total of 285.00 from holding Advance Auto Parts or generate 19.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Advance Auto Parts vs. Southwest Airlines Co
Performance |
| Timeline |
| Advance Auto Parts |
| Southwest Airlines |
Advance Auto and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and Southwest Airlines
The main advantage of trading using opposite Advance Auto and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto 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.| Advance Auto vs. Mliuz SA | Advance Auto vs. Natura Co Holding | Advance Auto vs. Rede DOr So | Advance Auto vs. Locaweb Servios de |
| Southwest Airlines vs. Delta Air Lines | Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. American Airlines Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |