Correlation Between Cornish Metals and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Southwest Airlines Co, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Southwest Airlines.
Diversification Opportunities for Cornish Metals and Southwest Airlines
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cornish and Southwest is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and Southwest Airlines go up and down completely randomly.
Pair Corralation between Cornish Metals and Southwest Airlines
Assuming the 90 days trading horizon Cornish Metals is expected to generate 1.11 times more return on investment than Southwest Airlines. However, Cornish Metals is 1.11 times more volatile than Southwest Airlines Co. It trades about 0.17 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about -0.05 per unit of risk. If you would invest 875.00 in Cornish Metals on October 20, 2024 and sell it today you would earn a total of 50.00 from holding Cornish Metals or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cornish Metals vs. Southwest Airlines Co
Performance |
| Timeline |
| Cornish Metals |
| Southwest Airlines |
Cornish Metals and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Southwest Airlines
The main advantage of trading using opposite Cornish Metals and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. Worldwide Healthcare Trust | Cornish Metals vs. JPMorgan Japanese Investment | Cornish Metals vs. Lindsell Train Investment | Cornish Metals vs. Spire Healthcare Group |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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