Correlation Between MoneysupermarketCom and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both MoneysupermarketCom and Southwest Airlines 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 MoneysupermarketCom and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MoneysupermarketCom Group PLC and Southwest Airlines Co, you can compare the effects of market volatilities on MoneysupermarketCom and Southwest Airlines 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 MoneysupermarketCom with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of MoneysupermarketCom and Southwest Airlines.
Diversification Opportunities for MoneysupermarketCom and Southwest Airlines
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MoneysupermarketCom and Southwest is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MoneysupermarketCom Group PLC and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and MoneysupermarketCom 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 MoneysupermarketCom Group PLC are associated (or correlated) with Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of MoneysupermarketCom i.e., MoneysupermarketCom and Southwest Airlines go up and down completely randomly.
Pair Corralation between MoneysupermarketCom and Southwest Airlines
Assuming the 90 days trading horizon MoneysupermarketCom Group PLC is expected to generate 0.8 times more return on investment than Southwest Airlines. However, MoneysupermarketCom Group PLC is 1.25 times less risky than Southwest Airlines. It trades about 0.0 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about -0.27 per unit of risk. If you would invest 19,160 in MoneysupermarketCom Group PLC on November 7, 2024 and sell it today you would lose (20.00) from holding MoneysupermarketCom Group PLC or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
MoneysupermarketCom Group PLC vs. Southwest Airlines Co
Performance |
| Timeline |
| MoneysupermarketCom |
| Southwest Airlines |
MoneysupermarketCom and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MoneysupermarketCom and Southwest Airlines
The main advantage of trading using opposite MoneysupermarketCom and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MoneysupermarketCom position performs unexpectedly, Southwest Airlines 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 Southwest Airlines will offset losses from the drop in Southwest Airlines' long position.| MoneysupermarketCom vs. Flow Traders NV | MoneysupermarketCom vs. Universal Display Corp | MoneysupermarketCom vs. CVS Health Corp | MoneysupermarketCom vs. Gamma Communications PLC |
| Southwest Airlines vs. Chrysalis Investments | Southwest Airlines vs. Sovereign Metals | Southwest Airlines vs. Herald Investment Trust | Southwest Airlines vs. Wheaton Precious Metals |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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