Correlation Between AKITA Drilling and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling 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 AKITA Drilling and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Southwest Airlines, you can compare the effects of market volatilities on AKITA Drilling 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 AKITA Drilling with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Southwest Airlines.
Diversification Opportunities for AKITA Drilling and Southwest Airlines
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AKITA and Southwest is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Southwest Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and AKITA Drilling 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 AKITA Drilling 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 AKITA Drilling i.e., AKITA Drilling and Southwest Airlines go up and down completely randomly.
Pair Corralation between AKITA Drilling and Southwest Airlines
Assuming the 90 days horizon AKITA Drilling is expected to under-perform the Southwest Airlines. But the pink sheet apears to be less risky and, when comparing its historical volatility, AKITA Drilling is 1.03 times less risky than Southwest Airlines. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Southwest Airlines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,147 in Southwest Airlines on August 31, 2024 and sell it today you would earn a total of 89.00 from holding Southwest Airlines or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Southwest Airlines
Performance |
| Timeline |
| AKITA Drilling |
| Southwest Airlines |
AKITA Drilling and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Southwest Airlines
The main advantage of trading using opposite AKITA Drilling and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling 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.| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc |
| Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. American Airlines Group | Southwest Airlines vs. JetBlue Airways Corp | Southwest Airlines vs. Delta Air Lines |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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