Correlation Between IShares Physical and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both IShares Physical 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 IShares Physical and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Physical Silver and Southwest Airlines Co, you can compare the effects of market volatilities on IShares Physical 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 IShares Physical with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Physical and Southwest Airlines.
Diversification Opportunities for IShares Physical and Southwest Airlines
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and Southwest is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and IShares Physical 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 iShares Physical Silver 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 IShares Physical i.e., IShares Physical and Southwest Airlines go up and down completely randomly.
Pair Corralation between IShares Physical and Southwest Airlines
Assuming the 90 days trading horizon IShares Physical is expected to generate 1.34 times less return on investment than Southwest Airlines. But when comparing it to its historical volatility, iShares Physical Silver is 1.33 times less risky than Southwest Airlines. It trades about 0.17 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,165 in Southwest Airlines Co on September 13, 2024 and sell it today you would earn a total of 202.00 from holding Southwest Airlines Co or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Physical Silver vs. Southwest Airlines Co
Performance |
| Timeline |
| iShares Physical Silver |
| Southwest Airlines |
IShares Physical and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Physical and Southwest Airlines
The main advantage of trading using opposite IShares Physical and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Physical 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.| IShares Physical vs. Invesco Physical Silver | IShares Physical vs. Neometals | IShares Physical vs. Coor Service Management | IShares Physical vs. Fidelity Sustainable USD |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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