Correlation Between Southwest Airlines and PEPSICO
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By analyzing existing cross correlation between Southwest Airlines and PEPSICO INC, you can compare the effects of market volatilities on Southwest Airlines and PEPSICO 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 PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and PEPSICO.
Diversification Opportunities for Southwest Airlines and PEPSICO
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southwest and PEPSICO is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and PEPSICO INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC 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 PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and PEPSICO go up and down completely randomly.
Pair Corralation between Southwest Airlines and PEPSICO
Considering the 90-day investment horizon Southwest Airlines is expected to generate 2.01 times more return on investment than PEPSICO. However, Southwest Airlines is 2.01 times more volatile than PEPSICO INC. It trades about 0.09 of its potential returns per unit of risk. PEPSICO INC is currently generating about -0.04 per unit of risk. If you would invest 2,940 in Southwest Airlines on September 3, 2024 and sell it today you would earn a total of 296.00 from holding Southwest Airlines or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.81% |
| Values | Daily Returns |
Southwest Airlines vs. PEPSICO INC
Performance |
| Timeline |
| Southwest Airlines |
| PEPSICO INC |
Southwest Airlines and PEPSICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and PEPSICO
The main advantage of trading using opposite Southwest Airlines and PEPSICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, PEPSICO 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 PEPSICO will offset losses from the drop in PEPSICO'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 |
| PEPSICO vs. Iridium Communications | PEPSICO vs. Ryanair Holdings PLC | PEPSICO vs. Alaska Air Group | PEPSICO vs. Southwest 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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