Correlation Between Hyundai and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Hyundai 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 Hyundai and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Southwest Airlines Co, you can compare the effects of market volatilities on Hyundai 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 Hyundai with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Southwest Airlines.
Diversification Opportunities for Hyundai and Southwest Airlines
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Southwest is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Hyundai 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 Hyundai Motor 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 Hyundai i.e., Hyundai and Southwest Airlines go up and down completely randomly.
Pair Corralation between Hyundai and Southwest Airlines
Assuming the 90 days trading horizon Hyundai Motor is expected to generate 1.03 times more return on investment than Southwest Airlines. However, Hyundai is 1.03 times more volatile than Southwest Airlines Co. It trades about 0.02 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.0 per unit of risk. If you would invest 5,265 in Hyundai Motor on August 25, 2024 and sell it today you would earn a total of 235.00 from holding Hyundai Motor or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.48% |
| Values | Daily Returns |
Hyundai Motor vs. Southwest Airlines Co
Performance |
| Timeline |
| Hyundai Motor |
| Southwest Airlines |
Hyundai and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Southwest Airlines
The main advantage of trading using opposite Hyundai and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai 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.| Hyundai vs. Vitec Software Group | Hyundai vs. Take Two Interactive Software | Hyundai vs. Planet Fitness Cl | Hyundai vs. Optima Health plc |
| Southwest Airlines vs. Samsung Electronics Co | Southwest Airlines vs. Samsung Electronics Co | Southwest Airlines vs. Hyundai Motor | Southwest Airlines vs. Toyota Motor Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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