Correlation Between Easy Software and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and Southwest Airlines Co, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and Southwest Airlines.
Diversification Opportunities for Easy Software and Southwest Airlines
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Easy and Southwest is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Easy Software 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 Easy Software AG 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 Easy Software i.e., Easy Software and Southwest Airlines go up and down completely randomly.
Pair Corralation between Easy Software and Southwest Airlines
Assuming the 90 days trading horizon Easy Software AG is expected to under-perform the Southwest Airlines. In addition to that, Easy Software is 3.05 times more volatile than Southwest Airlines Co. It trades about -0.04 of its total potential returns per unit of risk. Southwest Airlines Co is currently generating about -0.09 per unit of volatility. If you would invest 3,162 in Southwest Airlines Co on October 23, 2024 and sell it today you would lose (58.00) from holding Southwest Airlines Co or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. Southwest Airlines Co
Performance |
| Timeline |
| Easy Software AG |
| Southwest Airlines |
Easy Software and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and Southwest Airlines
The main advantage of trading using opposite Easy Software and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. Salesforce | Easy Software vs. SAP SE | Easy Software vs. Uber Technologies | Easy Software vs. PagerDuty |
| Southwest Airlines vs. ANTA SPORTS PRODUCT | Southwest Airlines vs. Digilife Technologies Limited | Southwest Airlines vs. Easy Software AG | Southwest Airlines vs. Playtech plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |