Correlation Between ING Groep and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both ING Groep 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 ING Groep and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Groep NV and Southwest Airlines, you can compare the effects of market volatilities on ING Groep 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 ING Groep with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Groep and Southwest Airlines.
Diversification Opportunities for ING Groep and Southwest Airlines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ING and Southwest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and Southwest Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and ING Groep 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 ING Groep NV 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 ING Groep i.e., ING Groep and Southwest Airlines go up and down completely randomly.
Pair Corralation between ING Groep and Southwest Airlines
Assuming the 90 days trading horizon ING Groep is expected to generate 2.21 times less return on investment than Southwest Airlines. But when comparing it to its historical volatility, ING Groep NV is 4.37 times less risky than Southwest Airlines. It trades about 0.09 of its potential returns per unit of risk. Southwest Airlines is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 53,000 in Southwest Airlines on September 12, 2024 and sell it today you would earn a total of 15,300 from holding Southwest Airlines or generate 28.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Groep NV vs. Southwest Airlines
Performance |
| Timeline |
| ING Groep NV |
| Southwest Airlines |
ING Groep and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Groep and Southwest Airlines
The main advantage of trading using opposite ING Groep and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Groep 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.| ING Groep vs. First Majestic Silver | ING Groep vs. New Oriental Education | ING Groep vs. UnitedHealth Group Incorporated | ING Groep vs. The Bank of |
| Southwest Airlines vs. Delta Air Lines | Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. Controladora Vuela Compaa |
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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