Correlation Between Southwest Airlines and Enbridge 6375
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Enbridge 6375 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 Enbridge 6375 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Enbridge 6375 Fixed, you can compare the effects of market volatilities on Southwest Airlines and Enbridge 6375 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 Enbridge 6375. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Enbridge 6375.
Diversification Opportunities for Southwest Airlines and Enbridge 6375
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southwest and Enbridge is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Enbridge 6375 Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 6375 Fixed 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 Enbridge 6375. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge 6375 Fixed has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Enbridge 6375 go up and down completely randomly.
Pair Corralation between Southwest Airlines and Enbridge 6375
If you would invest 2,708 in Southwest Airlines on September 3, 2024 and sell it today you would earn a total of 528.00 from holding Southwest Airlines or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.68% |
| Values | Daily Returns |
Southwest Airlines vs. Enbridge 6375 Fixed
Performance |
| Timeline |
| Southwest Airlines |
| Enbridge 6375 Fixed |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Southwest Airlines and Enbridge 6375 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Enbridge 6375
The main advantage of trading using opposite Southwest Airlines and Enbridge 6375 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Enbridge 6375 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 Enbridge 6375 will offset losses from the drop in Enbridge 6375's long position.| Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. American Airlines Group | Southwest Airlines vs. JetBlue Airways Corp | Southwest Airlines vs. Delta Air Lines |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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