Correlation Between Southwest Airlines and Celsius Holdings
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Celsius Holdings 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 Celsius Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Celsius Holdings, you can compare the effects of market volatilities on Southwest Airlines and Celsius Holdings 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 Celsius Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Celsius Holdings.
Diversification Opportunities for Southwest Airlines and Celsius Holdings
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southwest and Celsius is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings 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 Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Celsius Holdings go up and down completely randomly.
Pair Corralation between Southwest Airlines and Celsius Holdings
Considering the 90-day investment horizon Southwest Airlines is expected to generate 0.41 times more return on investment than Celsius Holdings. However, Southwest Airlines is 2.45 times less risky than Celsius Holdings. It trades about 0.35 of its potential returns per unit of risk. Celsius Holdings is currently generating about -0.1 per unit of risk. If you would invest 2,991 in Southwest Airlines on September 4, 2024 and sell it today you would earn a total of 309.00 from holding Southwest Airlines or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines vs. Celsius Holdings
Performance |
| Timeline |
| Southwest Airlines |
| Celsius Holdings |
Southwest Airlines and Celsius Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Celsius Holdings
The main advantage of trading using opposite Southwest Airlines and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Celsius Holdings 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 Celsius Holdings will offset losses from the drop in Celsius Holdings' long position.| Southwest Airlines vs. Delta Air Lines | Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. Frontier Group Holdings |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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