Correlation Between GWILLI FOOD and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both GWILLI FOOD 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 GWILLI FOOD and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GWILLI FOOD and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on GWILLI FOOD 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 GWILLI FOOD with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GWILLI FOOD and SOUTHWEST AIRLINES.
Diversification Opportunities for GWILLI FOOD and SOUTHWEST AIRLINES
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GWILLI and SOUTHWEST is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding GWILLI FOOD and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and GWILLI FOOD 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 GWILLI FOOD 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 GWILLI FOOD i.e., GWILLI FOOD and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between GWILLI FOOD and SOUTHWEST AIRLINES
Assuming the 90 days trading horizon GWILLI FOOD is expected to generate 1.36 times more return on investment than SOUTHWEST AIRLINES. However, GWILLI FOOD is 1.36 times more volatile than SOUTHWEST AIRLINES. It trades about 0.03 of its potential returns per unit of risk. SOUTHWEST AIRLINES is currently generating about 0.01 per unit of risk. If you would invest 1,208 in GWILLI FOOD on October 11, 2024 and sell it today you would earn a total of 362.00 from holding GWILLI FOOD or generate 29.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GWILLI FOOD vs. SOUTHWEST AIRLINES
Performance |
| Timeline |
| GWILLI FOOD |
| SOUTHWEST AIRLINES |
GWILLI FOOD and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GWILLI FOOD and SOUTHWEST AIRLINES
The main advantage of trading using opposite GWILLI FOOD and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GWILLI FOOD 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.| GWILLI FOOD vs. Tower Semiconductor | GWILLI FOOD vs. ON SEMICONDUCTOR | GWILLI FOOD vs. MTY Food Group | GWILLI FOOD vs. Taiwan Semiconductor Manufacturing |
| SOUTHWEST AIRLINES vs. GigaMedia | SOUTHWEST AIRLINES vs. MTY Food Group | SOUTHWEST AIRLINES vs. GWILLI FOOD | SOUTHWEST AIRLINES vs. MOLSON RS BEVERAGE |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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