Correlation Between Bloomsbury Publishing and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Bloomsbury Publishing 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 Bloomsbury Publishing and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomsbury Publishing Plc and Southwest Airlines Co, you can compare the effects of market volatilities on Bloomsbury Publishing 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 Bloomsbury Publishing with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Southwest Airlines.
Diversification Opportunities for Bloomsbury Publishing and Southwest Airlines
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bloomsbury and Southwest is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Bloomsbury Publishing 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 Bloomsbury Publishing Plc 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 Bloomsbury Publishing i.e., Bloomsbury Publishing and Southwest Airlines go up and down completely randomly.
Pair Corralation between Bloomsbury Publishing and Southwest Airlines
Assuming the 90 days trading horizon Bloomsbury Publishing Plc is expected to under-perform the Southwest Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Bloomsbury Publishing Plc is 1.23 times less risky than Southwest Airlines. The stock trades about -0.22 of its potential returns per unit of risk. The Southwest Airlines Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,025 in Southwest Airlines Co on August 29, 2024 and sell it today you would earn a total of 181.00 from holding Southwest Airlines Co or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomsbury Publishing Plc vs. Southwest Airlines Co
Performance |
| Timeline |
| Bloomsbury Publishing Plc |
| Southwest Airlines |
Bloomsbury Publishing and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomsbury Publishing and Southwest Airlines
The main advantage of trading using opposite Bloomsbury Publishing and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing 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.| Bloomsbury Publishing vs. Electronic Arts | Bloomsbury Publishing vs. Samsung Electronics Co | Bloomsbury Publishing vs. Ebro Foods | Bloomsbury Publishing vs. LPKF Laser Electronics |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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