Correlation Between Nanjing Panda and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Nanjing Panda 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 Nanjing Panda and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nanjing Panda Electronics and Southwest Airlines Co, you can compare the effects of market volatilities on Nanjing Panda 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 Nanjing Panda with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Panda and Southwest Airlines.
Diversification Opportunities for Nanjing Panda and Southwest Airlines
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nanjing and Southwest is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Panda Electronics and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Nanjing Panda 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 Nanjing Panda Electronics 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 Nanjing Panda i.e., Nanjing Panda and Southwest Airlines go up and down completely randomly.
Pair Corralation between Nanjing Panda and Southwest Airlines
If you would invest 3,164 in Southwest Airlines Co on October 11, 2024 and sell it today you would earn a total of 9.00 from holding Southwest Airlines Co or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.89% |
| Values | Daily Returns |
Nanjing Panda Electronics vs. Southwest Airlines Co
Performance |
| Timeline |
| Nanjing Panda Electronics |
| Southwest Airlines |
Nanjing Panda and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanjing Panda and Southwest Airlines
The main advantage of trading using opposite Nanjing Panda and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Panda 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.| Nanjing Panda vs. Astral Foods Limited | Nanjing Panda vs. Performance Food Group | Nanjing Panda vs. Nomad Foods | Nanjing Panda vs. United Natural Foods |
| Southwest Airlines vs. Corporate Office Properties | Southwest Airlines vs. UNITED RENTALS | Southwest Airlines vs. Nanjing Panda Electronics | Southwest Airlines vs. ALBIS LEASING AG |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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