Correlation Between Singapore Airlines and Broadwind
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Broadwind 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 Singapore Airlines and Broadwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines Limited and Broadwind, you can compare the effects of market volatilities on Singapore Airlines and Broadwind 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 Singapore Airlines with a short position of Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Broadwind.
Diversification Opportunities for Singapore Airlines and Broadwind
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Singapore and Broadwind is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind and Singapore 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 Singapore Airlines Limited are associated (or correlated) with Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Broadwind go up and down completely randomly.
Pair Corralation between Singapore Airlines and Broadwind
Assuming the 90 days trading horizon Singapore Airlines is expected to generate 14.47 times less return on investment than Broadwind. But when comparing it to its historical volatility, Singapore Airlines Limited is 5.05 times less risky than Broadwind. It trades about 0.06 of its potential returns per unit of risk. Broadwind is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 162.00 in Broadwind on October 13, 2024 and sell it today you would earn a total of 21.00 from holding Broadwind or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines Limited vs. Broadwind
Performance |
| Timeline |
| Singapore Airlines |
| Broadwind |
Singapore Airlines and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Broadwind
The main advantage of trading using opposite Singapore Airlines and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| Singapore Airlines vs. SOLSTAD OFFSHORE NK | Singapore Airlines vs. DELTA AIR LINES | Singapore Airlines vs. SBM OFFSHORE | Singapore Airlines vs. Wizz Air Holdings |
| Broadwind vs. Webster Financial | Broadwind vs. INTERSHOP Communications Aktiengesellschaft | Broadwind vs. Casio Computer CoLtd | Broadwind vs. Computershare 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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