Correlation Between Southwest Airlines and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Gol Linhas 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 Gol Linhas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Gol Linhas Aereas, you can compare the effects of market volatilities on Southwest Airlines and Gol Linhas 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 Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Gol Linhas.
Diversification Opportunities for Southwest Airlines and Gol Linhas
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southwest and Gol is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Gol Linhas Aereas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Aereas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Aereas has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Gol Linhas go up and down completely randomly.
Pair Corralation between Southwest Airlines and Gol Linhas
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 Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Southwest Airlines vs. Gol Linhas Aereas
Performance |
| Timeline |
| Southwest Airlines |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Southwest Airlines and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Gol Linhas
The main advantage of trading using opposite Southwest Airlines and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' 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 |
| Gol Linhas vs. Azul SA | Gol Linhas vs. Air France KLM | Gol Linhas vs. Copa Holdings SA | Gol Linhas vs. International Consolidated Airlines |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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