Correlation Between Southwest Airlines and Schneider National
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Schneider National 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 Schneider National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Schneider National, you can compare the effects of market volatilities on Southwest Airlines and Schneider National 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 Schneider National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Schneider National.
Diversification Opportunities for Southwest Airlines and Schneider National
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southwest and Schneider is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Schneider National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider National 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 Schneider National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider National has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Schneider National go up and down completely randomly.
Pair Corralation between Southwest Airlines and Schneider National
Considering the 90-day investment horizon Southwest Airlines is expected to generate 1.69 times less return on investment than Schneider National. In addition to that, Southwest Airlines is 1.42 times more volatile than Schneider National. It trades about 0.08 of its total potential returns per unit of risk. Schneider National is currently generating about 0.19 per unit of volatility. If you would invest 2,184 in Schneider National on August 24, 2024 and sell it today you would earn a total of 957.00 from holding Schneider National or generate 43.82% 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. Schneider National
Performance |
| Timeline |
| Southwest Airlines |
| Schneider National |
Southwest Airlines and Schneider National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Schneider National
The main advantage of trading using opposite Southwest Airlines and Schneider National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Schneider National 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 Schneider National will offset losses from the drop in Schneider National's long position.| Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. American Airlines Group | Southwest Airlines vs. JetBlue Airways Corp | Southwest Airlines vs. Spirit Airlines |
| Schneider National vs. Small Cap Core | Schneider National vs. Morningstar Unconstrained Allocation | Schneider National vs. Mutual Of America | Schneider National vs. Ep Emerging Markets |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |