Correlation Between Southwest Airlines and Sabre Corpo
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Sabre Corpo 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 Sabre Corpo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Sabre Corpo, you can compare the effects of market volatilities on Southwest Airlines and Sabre Corpo 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 Sabre Corpo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Sabre Corpo.
Diversification Opportunities for Southwest Airlines and Sabre Corpo
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southwest and Sabre is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo 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 Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Sabre Corpo go up and down completely randomly.
Pair Corralation between Southwest Airlines and Sabre Corpo
Considering the 90-day investment horizon Southwest Airlines is expected to generate 1.25 times less return on investment than Sabre Corpo. But when comparing it to its historical volatility, Southwest Airlines is 1.95 times less risky than Sabre Corpo. It trades about 0.35 of its potential returns per unit of risk. Sabre Corpo is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 322.00 in Sabre Corpo on September 4, 2024 and sell it today you would earn a total of 40.00 from holding Sabre Corpo or generate 12.42% 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. Sabre Corpo
Performance |
| Timeline |
| Southwest Airlines |
| Sabre Corpo |
Southwest Airlines and Sabre Corpo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Sabre Corpo
The main advantage of trading using opposite Southwest Airlines and Sabre Corpo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Sabre Corpo 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 Sabre Corpo will offset losses from the drop in Sabre Corpo's long position.| Southwest Airlines vs. Delta Air Lines | Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. Frontier Group Holdings |
| Sabre Corpo vs. Expedia Group | Sabre Corpo vs. Trip Group Ltd | Sabre Corpo vs. Booking Holdings | Sabre Corpo vs. Despegar 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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