Correlation Between AGRICUL BK and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both AGRICUL BK 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 AGRICUL BK and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICUL BK CHINA H and Southwest Airlines Co, you can compare the effects of market volatilities on AGRICUL BK 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 AGRICUL BK with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICUL BK and Southwest Airlines.
Diversification Opportunities for AGRICUL BK and Southwest Airlines
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGRICUL and Southwest is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AGRICUL BK CHINA H and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and AGRICUL BK 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 AGRICUL BK CHINA H 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 AGRICUL BK i.e., AGRICUL BK and Southwest Airlines go up and down completely randomly.
Pair Corralation between AGRICUL BK and Southwest Airlines
Assuming the 90 days trading horizon AGRICUL BK is expected to generate 2.16 times less return on investment than Southwest Airlines. In addition to that, AGRICUL BK is 1.04 times more volatile than Southwest Airlines Co. It trades about 0.06 of its total potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.13 per unit of volatility. If you would invest 2,904 in Southwest Airlines Co on August 31, 2024 and sell it today you would earn a total of 151.00 from holding Southwest Airlines Co or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AGRICUL BK CHINA H vs. Southwest Airlines Co
Performance |
| Timeline |
| AGRICUL BK CHINA |
| Southwest Airlines |
AGRICUL BK and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICUL BK and Southwest Airlines
The main advantage of trading using opposite AGRICUL BK and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICUL BK 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.| AGRICUL BK vs. Check Point Software | AGRICUL BK vs. Verizon Communications | AGRICUL BK vs. CPU SOFTWAREHOUSE | AGRICUL BK vs. Ribbon Communications |
| Southwest Airlines vs. RYANAIR HLDGS ADR | Southwest Airlines vs. Superior Plus Corp | Southwest Airlines vs. NMI Holdings | Southwest Airlines vs. Origin Agritech |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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