Correlation Between Southwest Airlines and Mangels Industrial
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Mangels Industrial 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 Mangels Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines Co and Mangels Industrial SA, you can compare the effects of market volatilities on Southwest Airlines and Mangels Industrial 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 Mangels Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Mangels Industrial.
Diversification Opportunities for Southwest Airlines and Mangels Industrial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southwest and Mangels is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial 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 Co are associated (or correlated) with Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Mangels Industrial go up and down completely randomly.
Pair Corralation between Southwest Airlines and Mangels Industrial
If you would invest 16,456 in Southwest Airlines Co on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Southwest Airlines Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. Mangels Industrial SA
Performance |
| Timeline |
| Southwest Airlines |
| Mangels Industrial |
Southwest Airlines and Mangels Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Mangels Industrial
The main advantage of trading using opposite Southwest Airlines and Mangels Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Mangels Industrial 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 Mangels Industrial will offset losses from the drop in Mangels Industrial's long position.The idea behind Southwest Airlines Co and Mangels Industrial SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mangels Industrial vs. Inepar SA Indstria | Mangels Industrial vs. Lupatech SA | Mangels Industrial vs. Paranapanema SA | Mangels Industrial vs. Plascar Participaes Industriais |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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