Correlation Between AEON STORES and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both AEON STORES 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 AEON STORES and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on AEON STORES 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 AEON STORES with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and SOUTHWEST AIRLINES.
Diversification Opportunities for AEON STORES and SOUTHWEST AIRLINES
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AEON and SOUTHWEST is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and AEON STORES 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 AEON STORES 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 AEON STORES i.e., AEON STORES and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between AEON STORES and SOUTHWEST AIRLINES
Assuming the 90 days trading horizon AEON STORES is expected to under-perform the SOUTHWEST AIRLINES. In addition to that, AEON STORES is 1.53 times more volatile than SOUTHWEST AIRLINES. It trades about -0.01 of its total potential returns per unit of risk. SOUTHWEST AIRLINES is currently generating about 0.0 per unit of volatility. If you would invest 3,322 in SOUTHWEST AIRLINES on August 28, 2024 and sell it today you would lose (241.00) from holding SOUTHWEST AIRLINES or give up 7.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
AEON STORES vs. SOUTHWEST AIRLINES
Performance |
| Timeline |
| AEON STORES |
| SOUTHWEST AIRLINES |
AEON STORES and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and SOUTHWEST AIRLINES
The main advantage of trading using opposite AEON STORES and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES 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.| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Microsoft | AEON STORES vs. Microsoft |
| SOUTHWEST AIRLINES vs. BURLINGTON STORES | SOUTHWEST AIRLINES vs. JIAHUA STORES | SOUTHWEST AIRLINES vs. FAST RETAIL ADR | SOUTHWEST AIRLINES vs. REVO INSURANCE SPA |
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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