Correlation Between Southwest Airlines and Becle SAB
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Becle SAB 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 Southwest Airlines and Becle SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Becle SAB de, you can compare the effects of market volatilities on Southwest Airlines and Becle SAB 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 Southwest Airlines with a short position of Becle SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Becle SAB.
Diversification Opportunities for Southwest Airlines and Becle SAB
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southwest and Becle is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Becle SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becle SAB de and Southwest Airlines 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 Southwest Airlines are associated (or correlated) with Becle SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becle SAB de has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Becle SAB go up and down completely randomly.
Pair Corralation between Southwest Airlines and Becle SAB
Assuming the 90 days trading horizon Southwest Airlines is expected to generate 1.06 times more return on investment than Becle SAB. However, Southwest Airlines is 1.06 times more volatile than Becle SAB de. It trades about 0.13 of its potential returns per unit of risk. Becle SAB de is currently generating about -0.18 per unit of risk. If you would invest 62,999 in Southwest Airlines on August 30, 2024 and sell it today you would earn a total of 2,721 from holding Southwest Airlines or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Southwest Airlines vs. Becle SAB de
Performance |
| Timeline |
| Southwest Airlines |
| Becle SAB de |
Southwest Airlines and Becle SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Becle SAB
The main advantage of trading using opposite Southwest Airlines and Becle SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Becle SAB 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 Becle SAB will offset losses from the drop in Becle SAB's long position.| Southwest Airlines vs. Applied Materials | Southwest Airlines vs. FibraHotel | Southwest Airlines vs. Grupo Carso SAB | Southwest Airlines vs. Costco Wholesale |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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