Correlation Between Gol Linhas and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Gol Linhas 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 Gol Linhas and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gol Linhas Aereas and Southwest Airlines, you can compare the effects of market volatilities on Gol Linhas 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 Gol Linhas with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Linhas and Southwest Airlines.
Diversification Opportunities for Gol Linhas and Southwest Airlines
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gol and Southwest is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gol Linhas Aereas and Southwest Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Gol Linhas 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 Gol Linhas Aereas 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 Gol Linhas i.e., Gol Linhas and Southwest Airlines go up and down completely randomly.
Pair Corralation between Gol Linhas and Southwest Airlines
If you would invest 3,030 in Southwest Airlines on August 27, 2024 and sell it today you would earn a total of 213.00 from holding Southwest Airlines or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Gol Linhas Aereas vs. Southwest Airlines
Performance |
| Timeline |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Southwest Airlines |
Gol Linhas and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gol Linhas and Southwest Airlines
The main advantage of trading using opposite Gol Linhas and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Linhas 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.| Gol Linhas vs. Azul SA | Gol Linhas vs. Air France KLM | Gol Linhas vs. Copa Holdings SA | Gol Linhas vs. International Consolidated Airlines |
| Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. American Airlines Group | Southwest Airlines vs. JetBlue Airways Corp | Southwest Airlines vs. Spirit Airlines |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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