Correlation Between Southwest Airlines and Kite Realty
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Kite Realty 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 Kite Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Kite Realty Group, you can compare the effects of market volatilities on Southwest Airlines and Kite Realty 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 Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Kite Realty.
Diversification Opportunities for Southwest Airlines and Kite Realty
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southwest and Kite is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Kite Realty go up and down completely randomly.
Pair Corralation between Southwest Airlines and Kite Realty
Considering the 90-day investment horizon Southwest Airlines is expected to generate 1.27 times less return on investment than Kite Realty. In addition to that, Southwest Airlines is 1.85 times more volatile than Kite Realty Group. It trades about 0.07 of its total potential returns per unit of risk. Kite Realty Group is currently generating about 0.16 per unit of volatility. If you would invest 2,150 in Kite Realty Group on September 3, 2024 and sell it today you would earn a total of 563.00 from holding Kite Realty Group or generate 26.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines vs. Kite Realty Group
Performance |
| Timeline |
| Southwest Airlines |
| Kite Realty Group |
Southwest Airlines and Kite Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Kite Realty
The main advantage of trading using opposite Southwest Airlines and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Kite Realty 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 Kite Realty will offset losses from the drop in Kite Realty'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 |
| Kite Realty vs. Site Centers Corp | Kite Realty vs. CBL Associates Properties | Kite Realty vs. Urban Edge Properties | Kite Realty vs. Inventrust Properties Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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