Correlation Between Southwest Airlines and Oatly Group
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Oatly Group 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 Oatly Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Oatly Group AB, you can compare the effects of market volatilities on Southwest Airlines and Oatly Group 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 Oatly Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Oatly Group.
Diversification Opportunities for Southwest Airlines and Oatly Group
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southwest and Oatly is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB 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 Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Oatly Group go up and down completely randomly.
Pair Corralation between Southwest Airlines and Oatly Group
Considering the 90-day investment horizon Southwest Airlines is expected to generate 1.71 times less return on investment than Oatly Group. But when comparing it to its historical volatility, Southwest Airlines is 2.42 times less risky than Oatly Group. It trades about 0.0 of its potential returns per unit of risk. Oatly Group AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Oatly Group AB on September 4, 2024 and sell it today you would lose (63.00) from holding Oatly Group AB or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines vs. Oatly Group AB
Performance |
| Timeline |
| Southwest Airlines |
| Oatly Group AB |
Southwest Airlines and Oatly Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Oatly Group
The main advantage of trading using opposite Southwest Airlines and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Oatly Group 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 Oatly Group will offset losses from the drop in Oatly Group's 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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