Correlation Between Southwest Airlines and Bio Techne
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Bio Techne 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 Bio Techne 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 Bio Techne, you can compare the effects of market volatilities on Southwest Airlines and Bio Techne 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 Bio Techne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Bio Techne.
Diversification Opportunities for Southwest Airlines and Bio Techne
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southwest and Bio is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Bio Techne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Techne 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 Bio Techne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Techne has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Bio Techne go up and down completely randomly.
Pair Corralation between Southwest Airlines and Bio Techne
Assuming the 90 days trading horizon Southwest Airlines Co is expected to generate 0.8 times more return on investment than Bio Techne. However, Southwest Airlines Co is 1.24 times less risky than Bio Techne. It trades about 0.08 of its potential returns per unit of risk. Bio Techne is currently generating about 0.05 per unit of risk. If you would invest 13,408 in Southwest Airlines Co on September 3, 2024 and sell it today you would earn a total of 3,048 from holding Southwest Airlines Co or generate 22.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.96% |
| Values | Daily Returns |
Southwest Airlines Co vs. Bio Techne
Performance |
| Timeline |
| Southwest Airlines |
| Bio Techne |
Southwest Airlines and Bio Techne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Bio Techne
The main advantage of trading using opposite Southwest Airlines and Bio Techne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Bio Techne 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 Bio Techne will offset losses from the drop in Bio Techne's long position.| Southwest Airlines vs. MAHLE Metal Leve | Southwest Airlines vs. Tres Tentos Agroindustrial | Southwest Airlines vs. Metalurgica Gerdau SA | Southwest Airlines vs. Multilaser Industrial SA |
| Bio Techne vs. Lupatech SA | Bio Techne vs. Southwest Airlines Co | Bio Techne vs. Paycom Software | Bio Techne vs. Align Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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