Correlation Between Southwest Airlines and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Evolution Gaming 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 Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Evolution Gaming Group, you can compare the effects of market volatilities on Southwest Airlines and Evolution Gaming 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 Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Evolution Gaming.
Diversification Opportunities for Southwest Airlines and Evolution Gaming
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southwest and Evolution is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Evolution Gaming go up and down completely randomly.
Pair Corralation between Southwest Airlines and Evolution Gaming
Considering the 90-day investment horizon Southwest Airlines is expected to generate 1.25 times more return on investment than Evolution Gaming. However, Southwest Airlines is 1.25 times more volatile than Evolution Gaming Group. It trades about 0.09 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.14 per unit of risk. If you would invest 3,147 in Southwest Airlines on August 31, 2024 and sell it today you would earn a total of 89.00 from holding Southwest Airlines or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines vs. Evolution Gaming Group
Performance |
| Timeline |
| Southwest Airlines |
| Evolution Gaming |
Southwest Airlines and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Evolution Gaming
The main advantage of trading using opposite Southwest Airlines and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Evolution Gaming 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 Evolution Gaming will offset losses from the drop in Evolution Gaming'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 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |