Correlation Between Eidesvik Offshore and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore 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 Eidesvik Offshore and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eidesvik Offshore ASA and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on Eidesvik Offshore 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 Eidesvik Offshore with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and SOUTHWEST AIRLINES.
Diversification Opportunities for Eidesvik Offshore and SOUTHWEST AIRLINES
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eidesvik and SOUTHWEST is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and Eidesvik Offshore 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 Eidesvik Offshore ASA 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 Eidesvik Offshore i.e., Eidesvik Offshore and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and SOUTHWEST AIRLINES
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the SOUTHWEST AIRLINES. In addition to that, Eidesvik Offshore is 1.08 times more volatile than SOUTHWEST AIRLINES. It trades about -0.18 of its total potential returns per unit of risk. SOUTHWEST AIRLINES is currently generating about 0.17 per unit of volatility. If you would invest 2,660 in SOUTHWEST AIRLINES on August 30, 2024 and sell it today you would earn a total of 387.00 from holding SOUTHWEST AIRLINES or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. SOUTHWEST AIRLINES
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| SOUTHWEST AIRLINES |
Eidesvik Offshore and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and SOUTHWEST AIRLINES
The main advantage of trading using opposite Eidesvik Offshore and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore 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.| Eidesvik Offshore vs. NOV Inc | Eidesvik Offshore vs. Superior Plus Corp | Eidesvik Offshore vs. NMI Holdings | Eidesvik Offshore vs. SIVERS SEMICONDUCTORS AB |
| SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Superior Plus Corp | SOUTHWEST AIRLINES vs. SIVERS SEMICONDUCTORS AB |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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