Correlation Between Southwest Airlines and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and UnitedHealth Group 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 UnitedHealth Group 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 UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Southwest Airlines and UnitedHealth Group 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 UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and UnitedHealth Group.
Diversification Opportunities for Southwest Airlines and UnitedHealth Group
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Southwest and UnitedHealth is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Southwest Airlines and UnitedHealth Group
If you would invest 16,456 in Southwest Airlines Co on September 14, 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Southwest Airlines |
| UnitedHealth Group |
Southwest Airlines and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and UnitedHealth Group
The main advantage of trading using opposite Southwest Airlines and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| Southwest Airlines vs. Take Two Interactive Software | Southwest Airlines vs. Costco Wholesale | Southwest Airlines vs. Nordon Indstrias Metalrgicas | Southwest Airlines vs. Mitsubishi UFJ Financial |
| UnitedHealth Group vs. Apartment Investment and | UnitedHealth Group vs. Cognizant Technology Solutions | UnitedHealth Group vs. SVB Financial Group | UnitedHealth Group vs. HDFC Bank Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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