Correlation Between GlobalData PLC and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both GlobalData PLC 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 GlobalData PLC and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalData PLC and Southwest Airlines Co, you can compare the effects of market volatilities on GlobalData PLC 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 GlobalData PLC with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalData PLC and Southwest Airlines.
Diversification Opportunities for GlobalData PLC and Southwest Airlines
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlobalData and Southwest is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData 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 GlobalData PLC 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 GlobalData 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 GlobalData PLC i.e., GlobalData PLC and Southwest Airlines go up and down completely randomly.
Pair Corralation between GlobalData PLC and Southwest Airlines
Assuming the 90 days trading horizon GlobalData PLC is expected to under-perform the Southwest Airlines. In addition to that, GlobalData PLC is 1.22 times more volatile than Southwest Airlines Co. It trades about -0.08 of its total potential returns per unit of risk. Southwest Airlines Co is currently generating about -0.08 per unit of volatility. If you would invest 3,378 in Southwest Airlines Co on October 30, 2024 and sell it today you would lose (109.00) from holding Southwest Airlines Co or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalData PLC vs. Southwest Airlines Co
Performance |
| Timeline |
| GlobalData PLC |
| Southwest Airlines |
GlobalData PLC and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalData PLC and Southwest Airlines
The main advantage of trading using opposite GlobalData PLC and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalData PLC 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.| GlobalData PLC vs. Viridian Therapeutics | GlobalData PLC vs. Nationwide Building Society | GlobalData PLC vs. Digital Realty Trust | GlobalData PLC vs. Dollar Tree |
| Southwest Airlines vs. St Galler Kantonalbank | Southwest Airlines vs. MoneysupermarketCom Group PLC | Southwest Airlines vs. Ion Beam Applications | Southwest Airlines vs. Commerzbank AG |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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